Union Bank of India’s Tier II Bonds (under Basel III) have been reaffirmed with a long-term rating of BWR AAA/Stable by Brickwork Ratings. Concurrently, the ratings for Additional Tier I Bonds (under Basel III) have been withdrawn due to their full redemption. This action reflects the bank’s strong financial profile and effective debt management strategies, maintaining investor confidence.
Rating Reaffirmation and Withdrawal
Brickwork Ratings (BWR) has announced the reaffirmation of its long-term rating for Union Bank of India’s Tier II Bonds (under Basel III). The rating has been maintained at BWR AAA/Stable, reflecting the bank’s robust credit profile and strong operational standing. This positive assessment acknowledges the bank’s comfortable capital buffers, improving asset quality, and sustained profitability.
Additional Tier I Bonds Redeemed
In a separate development, BWR has withdrawn the ratings for the Additional Tier I Bonds (under Basel III). This action is a direct consequence of the full redemption of these bonds by Union Bank of India. The withdrawal is in line with BWR’s policy for such instruments and signifies the successful completion of the debt obligations for these specific securities.
Key Factors Influencing Ratings
The reaffirmation of the Tier II bond rating is underpinned by Union Bank of India’s position as the fifth-largest Public Sector Bank in India, its strong franchise, and strategic shift towards granular retail and MSME advances. The bank’s capital adequacy ratios, including a CAR of 18.10% as of March 31, 2026, and a CET-I ratio of 15.69%, comfortably exceed regulatory requirements. Despite a higher Gross NPA compared to some peers, a high Provision Coverage Ratio (PCR) of over 95% and a Net NPA below 0.50% demonstrate effective risk mitigation.
The withdrawal of ratings for the Additional Tier I bonds follows confirmations of their full redemption, as communicated by the debenture trustee. These redemptions were executed through the exercise of call options by the bank.
Source: BSE
