TEXT-Fitch affirms Standard Chartered Bank Sri Lanka Branch at 'AAA(lka)'/stable
Feb 08 - Fitch Ratings has affirmed Standard Chartered Bank, Sri Lanka Branch's (SCBSL) National Long-Term rating at 'AAA(lka)'. The Outlook is Stable.
Rating Action Rationale
The affirmation of SCBSL's rating follows the Outlook revision on Standard Chartered Bank PLC (SCB) to Stable from Negative and the simultaneous affirmation of its Issuer Default Rating (IDR) at 'AA-' (see rating action commentary on www.fitchratings.com).
SCBSL's rating is at the highest end of the National Rating scale and reflects the credit profile and financial strength of the head office SCB. The rating is tied to SCB's IDR of 'AA-', which is on Stable Outlook, given SCBSL's legal status as a branch of SCB and that both are part of the same legal entity. SCB's rating is higher than Sri Lanka's Long-Term Local and Foreign Currency IDRs of 'BB-'/Stable, and is therefore mapped to 'AAA(lka)' for SCBSL on the National Rating scale.
Rating Drivers and Sensitivities
The decision regarding SCBSL's appeal against the fine of LKR27bn imposed by the Exchange Control Department for the alleged violation of exchange control laws remains pending. The amount of the fine exceeds SCBSL's equity. Fitch considers it extremely likely that timely support would be available from SCB, should it be required. Such support would be subject to regulatory restrictions or delays in remitting money into Sri Lanka, although Fitch currently sees this as a remote prospect. Adverse changes to such transfers and litigation risks leading Fitch to revise its expectations of parental support could be negative for the rating.
Operating in Sri Lanka since 1892, SCBSL is Sri Lanka's second-largest foreign bank branch and has a network of 10 branches.
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