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Fitch downgrades credit rating of 10 Sri Lankan banks

Fitch Ratings has downgraded the National Long-Term Ratings of 10 Sri Lankan banks following the recent sovereign downgrade and recalibration of the agency's Sri Lankan national rating scale.

The recalibration is to reflect changes in the relative creditworthiness among Sri Lankan issuers following Fitch's downgrade of Sri Lanka's Long-Term Local Currency Issuer Default Rating (IDR) to 'CC' from 'CCC'/Under Criteria Observation on 1 December 2022. Fitch typically does not assign Outlooks or apply modifiers to sovereigns with a rating of 'CCC+' or below.

The National Ratings of the Sri Lankan banks consider their creditworthiness relative to other issuers in the country. The recalibration of the Sri Lankan National Rating scale has resulted in downgrades of the National Long-Term Ratings of the following banks:

Bank of Ceylon (BOC) to 'A(lka)'/Rating Watch Negative (RWN) from 'AA-(lka)'/RWN

People's Bank (Sri Lanka) (PB) to 'A(lka)'/RWN from 'AA-(lka)'/RWN

Commercial Bank of Ceylon PLC (CB) to 'A(lka)'/RWN from 'AA-(lka)'/RWN

Hatton National Bank PLC (HNB) to 'A(lka)'/RWN from 'AA-(lka)'/RWN

Sampath Bank PLC (Sampath) to 'A(lka)'/RWN from 'AA-(lka)'/RWN

Cargills Bank Limited (CBL) to 'A(lka)'/RWN from 'A+(lka)'/RWN

DFCC Bank PLC (DFCC) to 'A-(lka)'/RWN from 'A+(lka)'/RWN

National Development Bank PLC (NDB) to 'A-(lka)'/RWN from 'A(lka)'/RWN

Seylan Bank PLC (Seylan) to 'A-(lka)'/RWN from 'A(lka)'/RWN

Nations Trust Bank PLC (NTB) to 'A-(lka)'/RWN from 'A(lka)'/RWN

The downgrades of the National Ratings of the 10 banks are driven by the downgrade of the sovereign's Long-Term Local-Currency IDR and the recalibration of the national rating scale while also reflecting the relative creditworthiness among Sri Lankan issuers. A probable default on the sovereign's local-currency obligations increases the risk that authorities will impose restrictions on banks servicing their local-currency obligations

Read more at Fitch Ratings 

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