Fitch maintains watch on Sri Lanka banks

Fitch Ratings said it was maintaining the Rating Watch on the national long-term ratings of six Sri Lankan regional development banks, including Rajarata Development Bank's BBB+(lka) rating, Ruhuna Development Bank's BBB+(lka) rating, Wayamba Development Bank's BBB+(lka) rating, Kandurata Development Bank's BBB(lka) rating, Uva Development Bank's BBB(lka) rating and Sabaragamuwa Development Bank's BBB-(lka) rating.

The banks went on review at the end of 2006 following news that the government would merge the six banks to form one combined entity. The merger will create an entity with nationwide presence and exposure, as well as mitigate the regional specific risks faced by individual banks.

Although challenges exist, such as the rationalization of products and services, Fitch said it believes the merger would help make the combined entity a more sustainable and competitive enterprise.

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