Fitch revises NDB's rating following aborted merger plan

RATING: Fitch Ratings Lanka has revised National Development Bank Limited's (NDB) outlook to Stable from Positive, following a joint announcement with Commercial Bank of Ceylon Limited (CB) on July 27 that negotiations on a possible merger (first announced on January 24, 2007) have been called off as it was deemed to be not feasible.

Consequent to this announcement, the ratings of NDB and CB have been affirmed.

NDB'ts national long-term rating at 'AA(lka)', Outlook changed to Stable from Positive and CB's national long-term rating at 'AA+(lka)'/Stable Outlook, Individual rating at 'D', Support at '5', Subordinated debentures at 'AA(lka)' and preference shares at 'AA-(AA minus)(lka)'.

Subsequent to the proposed merger announcement on January 24, NDB's rating Outlook was revised to Positive to reflect the benefits its creditors stood to gain by the bank being merged with a larger and higher rated entity.

The Outlook on CB was maintained at Stable as the proposed merger was not likely to have a significant impact on CB's credit profile.

Since the merger has now been called off, NDB's rating Outlook has been revised to Stable from Positive, while CB's ratings are affirmed.