Nov 03, 2011 (LBO) – Fitch Ratings Lanka said it is maintaining Merchant Credit of Sri Lanka’s (MCSL) National Long-Term ‘BBB(lka)’ rating on ‘Rating Watch Evolving’ (RWE) pending a merger.
MCSL is a registered finance company (RFC) that accounted for 1.9 percent of total RFC assets at end-2010. It has a network of 11 branches. The company is jointly held by BOC (49 percent) and MBSL (51 percent). The merger is with Merchant Bank of Sri Lanka (MBSL) and two subsidiaries of Bank of Ceylon (BOC) which has a ‘AA+(lka)’ rating.
“The RWE reflects uncertainty surrounding the final details of the intended merger, the profile of the merged entity, and the resulting shareholding of state-owned BOC in the merged entity,” a statement said.
BOC directly holds 72 percent of MBSL and 49 percent of MCSL.
“The Watch has been in place since May, when it was announced that the Central Bank of Sri Lanka (CBSL) has provided “in principal approval” for the issuance of a specialised banking license to MBSL subject to the amalgamation,” Fitch said.
“MCSL’s rating reflects its association with its main shareholder, BOC, in terms of its effective shareholding of 86 percent and representati