Fitch affirms National Savings Bank at ‘AAA(lka)'; outlook stable
Fitch Ratings Lanka has affirmed National Savings Bank's (NSB)
National Long-Term rating at ‘AAA(lka)'. The outlook is stable.The
rating action follows the halting and subsequent reversal of, a
transaction by NSB to acquire shares in The Finance Company PLC, which,
in Fitch's view, underlines the government's continued involvement with
the bank to ensure that it adheres to its policy mandate.
NSB's rating reflects Fitch's expectation of timely support from the
government of Sri Lanka, if required, given its state ownership,
significant policy mandate and systemic importance. Fitch is of the view
that state support is likely to flow to benefit both deposits and senior
unsecured creditors due to the confidence risk that could potentially
undermine systemic stability.
NSB's stipulated policy role under the NSB Act No.30 of 1971 is to
mobilise retail savings and invest in government securities. The bank is
bound by the Act to invest a minimum of 60% of its deposits in
government securities.
NSB's holding of government securities accounted for 67% of its total
assets and represented about 43% of the banking system's exposure to
government securities at end- 2011.
|