No Material Impact Of YES Bank Crisis On Shriram Transport Finance: S&P
Money & Banking
PTI
|
Updated on
March 09, 2020
Published on
March 09, 2020
S&P Global Ratings on Monday said Shriram Transport Finance Company (STFC) will not be materially affected by the troubles at YES Bank as the firm’s exposure is currently less than 0.5 per cent of its net worth. Earlier in the day, STFC said it has a small exposure of ₹50 crore to Yes Bank’s hybrid securities in the form of upper Tier II bonds. The finance company had made this investment in 2010.
YES Bank has been placed under a moratorium by the RBI and withdrawals have been capped. In a reconstruction plan of the bank, government-owned SBI is likely to pick up 49 per cent stake in the troubled bank.
“S&P Global Ratings believes STFC’s low exposure to Yes Bank’s hybrid securities will shield its financial profile. STFC does not hold any Additional Tier 1 (AT1) capital instruments of the bank,” the rating agency said in a release.
“Only AT1 instruments are currently envisaged to be permanently written down,” it said.
However, even if STFC is required to make provision for 100 per cent credit loss on this exposure, it will not materially affect its capitalisation given the exposure is currently less than 0.5 per cent of its net worth, it said.
“But we believe other finance companies holding Yes Bank’s hybrid securities in their treasury investments could see credit losses,” said S&P.
The agency further said it continues to see risk of a potential deterioration in STFC’s asset quality over the next few quarters.
Slower economic growth and weaker economic activity in India could lower vehicle utilisation, affecting the cash flows of road transport operators.
Published on
March 09, 2020
PTI
|
Updated on
S&P Global Ratings on Monday said Shriram Transport Finance Company (STFC) will not be materially affected by the troubles at YES Bank as the firm’s exposure is currently less than 0.5 per cent of its net worth. Earlier in the day, STFC said it has a small exposure of ₹50 crore to Yes Bank’s hybrid securities in the form of upper Tier II bonds. The finance company had made this investment in 2010.
YES Bank has been placed under a moratorium by the RBI and withdrawals have been capped. In a reconstruction plan of the bank, government-owned SBI is likely to pick up 49 per cent stake in the troubled bank.
“S&P Global Ratings believes STFC’s low exposure to Yes Bank’s hybrid securities will shield its financial profile. STFC does not hold any Additional Tier 1 (AT1) capital instruments of the bank,” the rating agency said in a release.
“Only AT1 instruments are currently envisaged to be permanently written down,” it said.
However, even if STFC is required to make provision for 100 per cent credit loss on this exposure, it will not materially affect its capitalisation given the exposure is currently less than 0.5 per cent of its net worth, it said.
“But we believe other finance companies holding Yes Bank’s hybrid securities in their treasury investments could see credit losses,” said S&P.
The agency further said it continues to see risk of a potential deterioration in STFC’s asset quality over the next few quarters.
Slower economic growth and weaker economic activity in India could lower vehicle utilisation, affecting the cash flows of road transport operators.
Published on
USAA To Expand Workforce In Chesapeake To Support Growing Membership
Company adding more than 500 employees in the area over the next two years Read more
USAA Advocates For Safe Driving Habits During 100 Deadliest Days Of Summer For Teens
New Safe Driving Simulator virtual experience helps drivers identify bad habits ahead of summer travels Read more
USAAs Poppy Wall Of Honor® Returns To National Mall For Sixth Year To Honor And Remember Fallen Service Members
Enhanced experience provides immersive storytelling to illustrate all that was given in service to our country Read more
USAA Appoints Brian Goldman As Chief Risk Officer
USAA announced today the appointment of Brian Goldman as its new Chief Risk Officer, effective May 27. Read more
Strong Financial Performance Reflects USAAs Unwavering Commitment To Members And The Military Community
Association added 1 million new members and continued to serve the military community and their families through enhance... Read more
USAA And The Valero Texas Open Join Forces To Honor Military Heroes
Service Members and Veterans to Receive Exclusive Benefits and Complimentary Access Read more