Gearing Up

Nov 07, 2011 (LBO) Sri Lanka’s Hatton National Bank will sell five billion rupees of debt within the next six months to boost capital and prepare itself to give more loans in the future, an official said. He said the bank has already raised nearly eight billion rupees in capital via a combination of equity and debt.

During May to September 2011 HNB raised six billion rupees in Tier I equity capital and two billion in Tier II through a subordinated debt, a Fitch, a ratings agency said.

“Ideally a lot of banks prefer to maintain a capital adequacy ratio of around 10 percent which is the minimum requirement set by the Central Bank,” said Maninda Wickramasinghe, the country head, Fitch Ratings Lanka.

“If any bank maintains that percentage as a policy I would say it is a well managed bank in terms of risk profile and 14 percent is a very good rate.”

A recent Fitch report said HNB’s total capital adequacy was 11.4 percent in the first half of 2011, with half year profits added, and Tier I alone was 10.2 percent, though slightly lower than last year.

Fitch has rated the lender, ‘AA-(lka)’ with a stable outlook. Its subordinated debt is rated a notch lower at A+ (lka). The new capital