Syndicate Bank to raise Rs 1, 750 cr through Tier II capital bonds
Public sector entity Syndicate Bank plans to raise Rs 1,750 crore through Tier-II capital bonds to shore up its capital base. ICRA has aasigned AA+ rating to these bonds, which are expected to absorb losses once the ‘point of non-viability’ is invoked. The rating factors in the moderation in the Manipal-based bank’s capitalisation profile, with core capital at 7. 2 per cent as of June. It was 7.5 per cent in March 2015, against 8.3 per cent in March 2014. (Core capital is the minimum amount a bank must have). Core capital consists of equity capital and declared reserves. The minimum requirement was put in place to ensure consumers are protected when creating financial accounts. The bank’s capital adequacy ratio was 10.17 per cent in June 2015 (Capital adequacy ratio is the ratio of a bank’s capital to its risk). Regulators track CAR to ensure a bank can absorb a reasonable amount of loss.