Combined Entity

Aug 16, 2010 (LBO) - Fitch Ratings has withdrawn the ratings of six Sri Lankan Regional Development Banks (RDBs) upon their merger and upgraded those of two which it said reflects its views on the rating of the merged bank. The merged entity with an asset base of 42 billion rupees as at end-June 2010 and a network of over 250 branches is expected to have a nationwide presence and exposure, the rating agency said in a statement.

"Also, Fitch expects the entity to mitigate the regional specific risks faced by the individual RDBs, while consolidating and centralising administrative functions.

"Although challenges exist, such as the rationalisation of products and service, the agency believes that the merger would help make the combined entity a more sustainable and competitive enterprise."

Fitch Ratings Lanka said the Sabaragamuwa Development Bank (SDB) rating was upgraded to 'BBB+(lka)' from 'BBB(lka)' with the Outlook revised to Stable from Positive.

The Uva Development Bank (UDB) was upgraded to 'BBB+(lka)' from 'BBB(lka)' with the Outlook revised to Stable from Positive.

It confirmed the ratings on Rajarata Development Bank, Ruhuna Development Bank, Wayamba Development Bank and Kandurata Developm