State intervention in the stock market deal between National Savings Bank (NSB) and The Finance Co (TFC) “underlines the government's continued involvement with the bank to ensure that it adheres to its policy mandate,” Fitch Ratings said in a statement this week.
It said it had affirmed NSB's National Long-Term rating at 'AAA(lka)' with a ‘stable’ outlook. The deal was halted and subsequently reversed.
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, the statement said.
NSB's stipulated policy role under the NSB Act 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. – ENDS-
Wednesday, May 22 2013
Last update:05:24:44 AM GMT