Positive Move

January 26, (LBO) – Fitch Ratings has upgraded National Development Bank’s credit outlook to positive from stable, but left the larger Commercial Bank’s outlook unchanged after the two firms said they were in talks to merge.

It has 157 branches in Sri Lanka and Bangladesh.

NDB has assets of 59 billion rupees and is now a commercial bank after its merger with NDB Bank Limited on August 01, 2005. It has a 32 percent stake in Eagle Insurance and has 31 branches. “The Positive Outlook on NDB reflects the benefits its creditors stand to gain by the bank being merged with a larger and higher rated entity,” Fitch Ratings Lanka said in a statement.

The Outlook on Commercial Bank remains Stable as the proposed merger is not likely to have a significant impact on Commercial Bank’s credit profile.”

Commercial Bank has a national long-term rating of AA+ (lka) and its subordinated debentures AA(lka), while NDB has an AA- (lka) rating.

Fitch says the ratings are subject to the deal going through without any party paying cash.

“Subject to no material cash outlays the merger will provide greater potential for the growth of the combined entity,” Fitch said.

The deal also has to get shareholder and regul