Fitch Ratings has revised the outlook on Bank of Ceylon (BOC, B+/Stable), National Savings Bank (NSB, B+/Stable) and People’s Leasing & Finance PLC (PLC, B/Stable) to Stable from Negative and affirmed their Long-Term Issuer Default Ratings (IDR).
The rating action follows the 9 February 2017 Outlook revision on Sri Lanka’s sovereign rating (B+/Stable) to Stable from Negative.
The IDRs, Support Rating and Support Rating Floors of BOC and NSB reflect Fitch’s expectation of extraordinary support from the sovereign. Their ratings are equalized with the sovereign. Fitch sees state support for BOC stemming from its high systemic importance and quasi-sovereign status while state support for NSB stems from its policy mandate. PLC’s ratings differ by one notch from those of the sovereign, as we expect sovereign support to flow through its parent, the state-owned and systemically important People’s Bank (Sri Lanka) (AA+(lka)/Stable). The Stable Outlook on the IDRs of BOC, NSB and PLC reflect the Stable Outlook on the sovereign’s rating.
Changes to the sovereign rating or perception of state support to BOC and NSB could result in a change in the lenders’ ratings. PLC’s ratings are also sensitive to changes in the sovereign rating, as this would affect People’s Bank’s ability to provide support to its subsidiary. PLC’s ratings are also sensitive to People’s Bank’s propensity to provide support.