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Standard & Poor's rate Chinese banks poorer than India
si Team
Thursday, September 1, 2005
International rating agency Standard & Poor’s, has rated Indian banks above Chinese banks. The ratings have been arrived after measuring the fundamental strength of the banks, without considering the possibility of potential capital contribution from their parent group, regulator or the government. S&P assigned this new rating called Bank

Fundamental Strength Rating to 110 banks in Asia. BFSRs indicate the prospect of a bank requiring external assistance during financial distress, rather than the overall likelihood of timely payment by the bank.

Among Indian banks, ICICI Bank and State Bank of India are rated as ‘C’—indicating adequate fundamental strength, while IDBI is rated as ‘D+’ reflecting a greater degree of vulnerability. However, Chinese, Indonesian and Philippine banks are all rated as ‘D’ or ‘D+’ category. Leading banks in Japan, Malaysia and Taiwan are rated under BFSRs as ‘B’. Banks located in Hong Kong, Japan, Korea and Taiwan are at the middle with C+ rating in the nine-point scale rating.

An interesting development is that China is now increasingly considered as a favorite destination by Indian banks. Three Indian Banks - Allahabad Bank, UTI Bank and UCO Bank have received RBI approval for opening representative offices in China. They are waiting for approval from the Chinese monetary authority. Bank of Baroda, Bank of India and Punjab National Bank already have representative offices in China.

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