Credit Watch

Mar 14, 2009 (LBO) – Fitch Ratings has put the ‘BBB-(lka)’ rating of Sri Lanka’s People’s Merchant Bank (PMB) on a negative watch after the firm said it was taking over an unlisted financial firm whose financial profile was uncertain, the rating agency said. PMB, a listed firm which is 39 percent owned by Sri Lanka’s People’s Bank said it was taking over a company called ABC Credit Card Company Ltd, through a vehicle called PMB Credit Card Company Ltd.

Through this PMB was also expected to acquire a 44 percent stake in Silvereen Finance Company held by ABC.

“This rating action reflects the agency’s concerns on the possible impact on PMB’s financial profile as a result of the acquisition, due to uncertainties about the underlying financial profile (which is not publicly available) of the acquired entity and the modality of financing of the acquisition,” Fitch said.

A ‘rating watch negative’ indicates that the firm’s rating could be downgraded, or left as it is, after Fitch get “more clarity” on the impact of the transaction on PMB’s finances, the rating agency said.

ABC is part of Sri Lanka’s ABC group of companies and is not a regulated entity. Silvereen is regulated.

Fitch said PMB reported assets of 2.4 billion rupees by December