Bank of Ceylon High Risk of Default


(Reuters) - (The following statement was released by the rating agency)
This announcement corrects the version published on 25 March 2014 to include disclosure language relating to Bank of Ceylon's shareholding in Fitch Ratings Lanka Ltd that was missing from the previous version.
Fitch Ratings has affirmed Bank of Ceylon's (BOC) Long-Term Foreign Currency and Local Currency Issuer Default Ratings (IDRs) at 'BB-' with a Stable Outlook. The agency has also affirmed BOC's Viability Rating (VR) at 'b+'. BOC's National Long-Term rating has also been affirmed at 'AA+(lka)' with a Stable Outlook. A full list of rating actions is at the end of this rating action commentary.
KEY RATING DRIVERS - IDRS, NATIONAL RATINGS AND DEBT
BOC's IDRs and National Long-Term rating reflect the government of Sri Lanka's (BB-/Stable) high propensity but moderate ability to provide support to the bank under extraordinary situations. The state's high propensity stems from BOC's high systemic importance as the largest bank in Sri Lanka, its quasi-sovereign status, its role as a key lender to the government and full government ownership. The state's moderate ability to provide support is reflected in the sovereign rating.
The Stable Outlook on BOC's IDRs and National Long-Term rating reflects the Stable Outlook on Sri Lanka's sovereign rating.
The US dollar senior unsecured notes are rated at the same level as BOC's Long-Term Foreign Currency IDR as they constitute direct, unsubordinated and unsecured obligations of the bank, and rank equally with all its other unsecured and unsubordinated obligations.
BOC's Sri Lanka rupee-denominated subordinated debt is rated one notch below its National Long-Term rating to reflect its gone-concern loss-absorption quality in the event of liquidation.
RATING SENSITIVITIES - IDRS, NATIONAL RATINGS AND DEBT
Any change in Sri Lanka's sovereign rating or the perception of state support to BOC could result in a change in BOC's IDRs, National Long-Term rating, and issue ratings. Visible demonstration of preferential support for BOC in the form of an explicit guarantee will be instrumental to an upgrade of its National Long-Term rating.
KEY RATING DRIVERS - VIABILITY RATING
The bank's VR remains under pressure due to its thin capitalisation and declining asset quality. The VR also takes into consideration BOC's strong domestic funding franchise that is underpinned by its state linkages.
Increased delinquencies in BOC's gold backed loans portfolio, which expanded rapidly since 2010, have been the main contributor to the increase in non-performing loans (NPL), a phenomenon that has been seen across the sector. BOC has concentration risk arising from high exposure to the state sector (state and state-owned entities). Of the bank's total state sector exposure at end-2013, about 40% is guaranteed by the state.
Reported Tier 1 regulatory capital adequacy ratio (CAR) stood at 8.0% at end-2013 and benefited from exposures that are zero-risk weighted according to local regulatory requirements. If risk weights of 100% and 50% were applied on foreign currency denominated state sector and gold backed exposures respectively, BOC's Tier 1 CAR would be much lower. The pace of loan growth slowed to 6% in 2013 from 27% a year earlier. This supported a reduction in the loans-to-deposits ratio to 91% at end-2013 from 105% at end-2012.
RATING SENSITIVITIES - VR
A continued decline in capitalisation through a surge in lending or a further decline in asset quality alongside high dividend payouts could place downward pressure on the bank's VR. A timely capital infusion would support the VR. BOC is the largest bank in Sri Lanka in terms of assets. BOC has 13 subsidiaries and five associates and has branches in Chennai, India, Male, Maldives and the Seychelles.

Note:

BB

Credit quality is “speculative” and “non-investment grade.” DBRS is uncertain of the subject’s capacity to make its payments.

Comments

  1. BOYCOTT THIS COMING ELECTION.

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    Replies
    1. Haven't you still learnt a lesson?

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  2. ceylon Bank is also knwon for being a supplier of loans to regional dictators.which expalin why PP welcomed the Bank with opened arms on our shores.Though,of the verge of defraud,Ceylon Bank is about to give Maldives Republic.$500 millions in developemnt loan.I tend to think one reasons PP welcomed Ceylon bank with opend arms,is that it provides PP with an alternatives of securing loans that it might not have in the coming future from IMF ,W Bank EU should those organizations and countries decide to stop feeding Pp dictatorship with loans that are never accoutned for.It allows PP,to avoid devaluate once against our currency.In other words,Pp will use more loans to avoid the predicted devaluation.It is a way on hiding the real problems and an attempt to stabilize PP crumbing system and economic policies. etc...

    Jeanne D'Arc

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  3. correction--avoid Pp from devaluating our current as planned at least on the short- term.

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  4. Boyccotting is what pp would like for it would allow FAURE to grab power without competition,but alos shut up Oppostion's mouths for One cannot compalined about fraud,manipulation and vote rigging when one has not participate,thus giving FAURE CARTE BLANCHE to silence anyone who did not particiapte by force who ever dare challenging his Prtesidency.On the other Hand,since PPp candiadtes whoever ihe or she is cannot win in free and fair election ,it is clear that FAURE woulkd put himself on power as his predeccesor by fruad,then we the people would have the legitimacy to go on the streets and ask FAURE to give us back our stolen votes.He might there also use force to silence Seychellois which expalin why Pp recruit mercenaires but do not be afriad of Pp mercneaires nor of PP thugs ,should they ever attempt to use brutality ,voilence of the peopl asking for their vote back in 2016,i promise you,they be dealt with accordingly within hours after their astoricities.I am going to make sure FAURE dream of becoming the new dictator-in-Chief never take place.



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  5. FAURE feels very good amount his Indian,Sri Lankan family members,much better than amoung Seychellois.That we continue to sell out,import his family members to colonize our land should not be a surprising thing.Even RAm would like to see his whole family members who stated in India (which is a whole village of thousands of heads)on our shores.Then As PERERA they would benfit on free school,haelth care,socail security,amybe made ministers,Ambassadors,high official in our Insittutions and finally gift them our passport them they can enjoy the other benfits as pension for life,access to land,travel on waivers to EUrope seomthing they cannot now,after a years go find their wives,husband in Indai and bring them to our shores to help PP ,out number Seychellois and repalce them by foreigners ,etc....

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  6. Is Ceylon Bank the new money laundering bank after Seychelles Saving bank whatever their names.

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  7. Can someone clarify to the rumour that tarzar special forces is about to stage a coup detat in Seychelles.

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  8. Perrera,has always been used by used by jame misel.His son was granted Seychelles scholarship to the uk university and now he has settle in western Australia.most likely preparing the ground for his father immigration after sucking seychellios tax payers money.creole treau couyon.la zot pe gayne baise avec Arab,malbar,larisi,srilakan.ki jour Ki zot pou comprend.zakarie baccarie from Perth.

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  9. Whether he has been used or not is not the propblem the,problem is he is not Seychellois,secondly his GOP contract terminated he should leave.That what our laws say.

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    Replies
    1. Perera was granted Seychelles citizenship. Unless his citizenship is revoked he can remain as long as he likes in Seychelles. GOP contract has nothing to do with his residence in Seychelles. Where did you get that law from?

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  10. There are persistent rumour within spdf that tarzar special forces id to stage a military coup on the island.
    these guys are young soldiers payet pas pou capab barey Sa voissi ya gsyne latack ancore.

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    Replies
    1. It is not going to happen now, everyone knows about it, I'm sure the politicians will be keeping a close eye on them from now on. Don't do what the yanks did in Somalia, landed on the beach with the world Press waiting for them to take pictures. We all know what happened with "Operation Restore Hope" in 1993 which resulted in "Black Hawk Down". Keep your friends close, but keep your enemies closer!

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  11. Tazar was created by Michel regime with the sole purpose to intimidate Seychellois and keep Pp in power; this is why the unit was named 'Tazar' referring to a well known fish that the locals fear enormously for its trait in attacking people in the sea and can cause serious injury with its razor sharp teeth. The unit has been groomed, armed to the teeth and paraded in public on many occasions just like in North Korea. Well, as the locals say "Sa qui'ne chose son chose, y a chose li-meme!"

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  12. Who ever take the dicision to oust PP should be encouraged,supported,after all the defence forces uttermost duty is to defence the country aginst not only foreign threats but internal threat as State terrorism,fighting the invasion of mercenaries(who are paid foreign criminals cover by no laws be it International ro National).You know what,in fact ,State Terorism or state organized crimes are more dangerous than Piracy,etc....It should be radicated by all means possible.

    There however,something that must be cristal clear for PP,Seychellois are determined not to let Pp State organized terorism does not excceed 2016.Communsim and tyranny has no place in our land in the 21st century.

    Pp can do as FAR has dictate to them todo so,Herminie could take the example of RWANDA and start a reconciliate programme,or delvier free and fair election or Pp can choose to face lethal means.

    I hope they would become a little more intelligent not to opt for the last solution ,for it would be destructive to both Pp and its ilks.

    Jeanne D'Arc

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  13. I want to comment on NATION's artilce entitled BRIGNING THE SINGAPOUR MIRACLE TO ASEYCHELLES.Singapour though a succeful econimc growth is not an exception ,many countires are perfroming brilliantly when it comes to economic growth.Furthermore,each countires has its own potential and ability and should not necessarily copy others.

    Singapour is an authoirtarian Capitalism,thus rape freedom and rgihts .Do Seychellois want their freedom and rights rape for economic growth that benefits a little gang of thugs?the naswer is no.FREEDOM and rights CANNOT GBE TAKEN OR CONSIDER MORE IMPORTANT THAN freedom and `ights.

    In fact,FREEDOM IS the primary end the principle means of developemnt,not the contary.ECONIMC FREEDOm is much more effective than authoritarian capitalism,it reduce poverty,unemployment,and create wealth for both indiviudals and state.

    Civil and politcal rights SUPERIOR than econimc growth.What this author is trying to sell us is that we must sacrifice our freedom and rights for the sake of economic growth(or thew stlye of authoritarian Capitalism like Singapour,China,etc...Or that FREEDOM AND RIGHTS have to be rejected beucase they are by definition incompartible to economic growth.absurb ,ISN'T IT--WHEN ONE LOOK FOR INSTANCE ECONOMY OF WESTERN COUNTIRES LIKE GERMANY,sWITZERLAND,USE AND NORTH EUROPEn countires.

    Pp has already copied Singapour,UAe economic Authoirtarina Capitalism it has failed.it has emprovvished,Bankrupt,our economic and country.What we need is economic growth that benefit the majority and country not a gang of crooks.

    fINALLY ,THE DECALRATION OF hUMAN RIGHTS puts civil and politcal RIGHTS ON AN EVEN FOOTING AS ECONOMIC RIGHTS.That is Human Rights is links to Economic growth and security too.It provides a time table for successful societies.

    Seychellois,are proud people,they donot want to be somebody else as if they are incapable to think themsleves,do things their own way,and crearte thier own success and by their own means,Economic growth PP.must serve the people.

    Jeanne D'Arc

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  14. Ceylon bank about to bankrupt.So introduce it in Seychelles than it can collect the 1,2 billion leaving our shore annual becuase of expats.then it can survive.

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  15. Breaking news,William Herminie has publicly stated that a coup detat is imminent in the Seychelles.Surely he must know something to make such a comment.

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  16. Why then does he ask his ilks in the Assembly to avoid it by either opposting PP unilateral decsions and dicta<tions in the Assembly,or publicly supporting FRA call for reconciliation,or demmmssion as member of PP to show his disapporval etc.....It seems greed make him unable to change though afraid of a Coup ,which would have one consequence of all Pp thugs namely execution.
    He was In RWANDA - i donto know if to ask for forgiveness ofr aprticipating in RWANDA genocide or preparing his exile there.

    07.09

    On exapts--i would come in the coming weeks on the inderectly on the subject.Inderectly for there is an important issue that /Seychelles Today raised last week on "AGEING POPULATION"WHICH IIS AN IMPORTANT CONCERN AND THAT BOTH SEYCHELLOIS AND GOVERNEMNT SHOULD SART ACTING ON FOR THE LONG -TERM CONSEQUECNES ARE SIMILAR TO THAT OF A FAILED STATE.

    jEANNE DÂrc



    ReplyDelete

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