Fitch Ratings Lanka has affirmed Standard Chartered Bank, Sri Lanka Branch’s (SCBSL) National Long-Term Rating at ‘AAA(lka)’. The Outlook is Stable.
The affirmation of SCBSL’s rating follows the downgrade of Standard Chartered Bank’s (SCB) Issuer Default Rating to ‘A+’ with Negative Outlook, from ‘AA-’ with Negative Outlook on 5 November 2015.
SCBSL’s rating is at the highest end of the National Rating scale and reflects the credit profile and financial strength of the branch relative to domestic peers. SCB’s rating is higher than Sri Lanka’s Long-Term Local- and Foreign-Currency Issuer Default Ratings of ‘BB-’, and as a result, SCBSL’s rating is consistent with ‘AAA(lka)’.
The rating is linked to SCB’s IDR because of SCBSL’s legal status as a branch of SCB, making it a part of the same legal entity. Fitch believes that support from SCB would be forthcoming if required, subject to any regulatory constraints on remitting money into Sri Lanka.
The branch is the second-largest among the Fitch-rated foreign bank branches in Sri Lanka, with an asset base of Rs127 billion at end-1H15. It accounted for 1.7 percent of total banking sector assets at end-1H15.
A downgrade of SCBSL’s national rating could result if SCB’s IDRs were to fall below those of Sri Lanka. Any changes to Fitch’s expectations of parental support could also be negative for the rating.
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