Demotion

July 30, 2007 (LBO) – Fitch Ratings has downgraded the rating outlook of National Development Bank from ‘positive’ to ‘stable’ after a proposed merger with the Commercial Bank was aborted. NDB has an asset base of 65 billion rupees. National Development Bank, originally a development finance institution, merged with NDB Bank, its commercial banking subsidiary in August 2005 to become a commercial bank. NDB has a national long-term rating of AA (lka) from Fitch.

Commercial Bank has a AA+ (lka) rating from Fitch with a stable outlook, which was not changed.

Fitch upgraded the outlook of NDB’s rating to positive in January after an announcement of merger talks was made.

Fitch said the ‘positive’ tag reflected the “benefits its creditors stood to gain by the bank being merged with a larger and higher rated entity.”

The outlook on Commercial Bank was not changed as the proposed merger was not thought to have a significant impact on its credit profits.

“Since the merger has now been called off, NDB’s rating outlook has been revised to Stable from Positive, while CB’s ratings are affirmed,” Fitch said.

Fitch has also given Commercial Bank an individual rating of ‘D’