Standard & Poor’s Ratings Services (S&P) said that its ratings on DFCC Bank (DFCC: B/Stable/B) are not affected by the bank’s proposed merger with DFCC Vardhana Bank PLC.
“Our analysis of DFCC is already based on the consolidated profile of the two entities including their franchise, funding, asset quality, earnings and capitalization.
Our ratings on DFCC reflect the bank’s satisfactory business position, better capitalization and earnings than domestic peers’, limited deposit base and branch network and exposure to sensitive loan segments,” the rating agency said.
DFCC will be the surviving entity with a commercial banking licence.
According to S&P, the merger will bring limited cost benefits because the banks already have operational synergies.
The merger is subject to shareholders and regulatory approvals. “DFCC is a licensed specialized bank focused on term project lending. Its consolidated assets are Rs.211 billion as of March 31, 2015. DFCC has a 99.17 percent stake in commercial bank DFCC Vardhana Bank PLC,” in a statement it said.
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