Fitch affirms HSBC Sri Lanka Branch at ‘AAA’; Outlook Stable

Fitch Ratings Lanka has affirmed HSBC Sri Lanka Branch’s (HSBCSL) National Long-Term Rating at ‘AAA(lka)’. The Outlook is Stable.

Key rating drivers: The affirmation of HSBCSL’s rating follows the affirmation of its parent The Hongkong and Shanghai Banking Corporation Limited’s (HKSB) Issuer Default Rating (IDR) at ‘AA-’ with Stable Outlook on 16 May 2013 (see the rating action commentary on www.fitchratings.com).

The rating reflects the financial strength of HKSB, given that HSBCSL is a branch of HKSB and is part of the same legal entity as HKSB. Fitch believes that support from HKSB would be forthcoming if required, subject to any regulatory constraints on remitting money into Sri Lanka. HKSB is rated above Sri Lanka’s IDR of ‘BB-’ which has a Stable Outlook.

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Rating sensitivities: HSBCSL’s National Long-Term Rating is at the highest end of the National Rating scale. A downgrade of HSBCSL rating could result from HKSB’s rating falling below Sri Lanka’s IDR. Any changes to Fitch’s expectation of support from HKSB could also be negative for the rating.

Established in 1892, HSBCSL is Sri Lanka’s largest foreign bank branch.