Fitch places...

The rating action follows the announcement by the Government on 11 November that the Cabinet of Ministers granted approval for the proposal to transfer all the State-owned shares of HDFC and SMIB to Bank of Ceylon (BOC; (CC+/AA-(lka)/Stable) and People’s Bank (Sri Lanka) (PB; AA-(lka)/Stable), respectively.

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The modalities and resolution of the intended acquisitions are not yet known.

“The RWP reflects Fitch view that the acquisitions of HFC and SMIB by BOC and PB, respectively, would result in HDFC and SMIB benefitting from a very high likelihood of support from their new owners,” Fitch said in a statement. Fitch will reflect this likelihood of support via support-driven national ratings upon the completion of each transaction. Fitch expects to resolve the RWP upon closing of the transaction and the resolutions likely to take longer than Fitch's normal Rating Watch resolution horizon of six months.