NDB receive AA rating
Fitch Ratings Lanka Limited (FRL) affirmed the AA(lka) National
Rating assigned for implied long-term unsecured senior debt of National
Development Bank Limited (NDB), following the merger with NDB Housing
Bank Limited ("NDBH"). The outlook on the rating is stable. "AA"
national ratings denote a very strong credit risk relative to other
issuers or issues in the same country.
The credit risk inherent in these financial commitments differs only
slightly from the country's highest rated issuers or issues. The rating
takes into consideration NDB's strong financial profile, conservative
and prudent policies, good asset quality, above-average risk management
and sound capital position.
This is result of the September 4 2006 announcement that NDB has
completed its acquisition of 100% ownership of its partly owned
subsidiary NDB Housing Bank Limited (rated AA-(lka), which was merged
with NDB on September 1, 2006, with the approval of the Central Bank of
Sri Lanka. As such, the assets and liabilities of NDBH will be assumed
by NDB after which NDBH would be wound up.
NDBH as a licensed specialized bank was obliged to increase its share
capital and reserves to Rs 1.5 Bn by December 31, 2007 under new Central
Bank rules on minimum capital requirements. NDB acquired all the shares
held by the minority shareholders of NDBH by April 2006, and
subsequently merged the two banks with the approval of the Monetary
Board. This merger enabled the housing business to use the strong
capital base of NDB, rather than raise additional funds from its
shareholders.
The merger further strengthens NDB Bank's position as a full service
commercial bank, by enabling it to offer housing finance through its
growing branch network to the entire customer base of the NDB Group.
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