ECONOMYNEXT – Fitch Ratings said it had downgraded 10 Sri Lanka banks following a re-caliberation of the local currency sovereign rating.
All 10 banks on rating watch negative.
The full statement is reproduced below:
Fitch Ratings – Colombo – 12 Jan 2023: Fitch Ratings has downgraded the National LongTerm Ratings of 10 Sri Lankan banks following the recent sovereign downgrade and recalibration of the agency’s Sri Lankan national rating scale.
The recalibration is to reflect changes in the relative creditworthiness among Sri Lankan issuers following Fitch’s downgrade of Sri Lanka’s Long-Term Local Currency Issuer Default Rating (IDR) to ‘CC’ from ‘CCC’/Under Criteria Observation on 1 December 2022. Fitch typically does not assign Outlooks or apply modifiers to sovereigns with a rating of ‘CCC+’ or below.
National scale ratings are a risk ranking of issuers in a particular market designed to help local investors differentiate risk. Sri Lanka’s national scale ratings are denoted by the unique identifier ‘(lka)’.
Fitch adds this identifier to reflect the unique nature of the Sri Lankan national scale. National scales are not comparable with Fitch’s international rating scales or with other countries’ national rating scales. For details, see Fitch Ratings Recalibrates Sri Lanka’s National Rating Scale, dated 19 December 2022.
The National Ratings of the Sri Lankan banks consider their creditworthiness relative to other issuers in the country. The recalibration of the Sri Lankan National Rating scale has resulted in downgrades of the National Long-Term Ratings of the following banks:
Bank of Ceylon (BOC) to ‘A(lka)’/Rating Watch Negative (RWN) from ‘AA-(lka)’/RWN
People’s Bank (Sri Lanka) (PB) to ‘A(lka)’/RWN from ‘AA-(lka)’/RWN
Commercial Bank of Ceylon PLC (CB) to ‘A(lka)’/RWN from ‘AA-(lka)’/RWN
Hatton National Bank PLC (HNB) to ‘A(lka)’/RWN from ‘AA-(lka)’/RWN
Sampath Bank PLC (Sampath) to ‘A(lka)’/RWN from ‘AA-(lka)’/RWN
Cargills Bank Limited (CBL) to ‘A(lka)’/RWN from ‘A+(lka)’/RWN
DFCC Bank PLC (DFCC) to ‘A-(lka)’/RWN from ‘A+(lka)’/RWN
National Development Bank PLC (NDB) to ‘A-(lka)’/RWN from ‘A(lka)’/RWN
Seylan Bank PLC (Seylan) to ‘A-(lka)’/RWN from ‘A(lka)’/RWN
Nations Trust Bank PLC (NTB) to ‘A-(lka)’/RWN from ‘A(lka)’/RWN
A full list of ratings is at the end of this commentary.
Other Sri Lankan banks’ national ratings, which are not mentioned in this commentary, have not been affected by the recalibration exercise.
Macabre is the word, and even the private sector is responsible for the impending collapse of the banking sector, what with all kinds of interests, influences and political pressure, to create the section referred to as “Honda Sully Karayo”. Many people have been screwed by the government-sponsored banks of the SMEs, who are now unable to withdraw their monies deposited in good faith. Fraud and corruption are the banks’ principles and practice.