Hatton National Bank PLC’s (HNB; A(lka)/Stable) potential acquisition of Bank Alfalah Limited’s (BAFL) Bangladesh operations is unlikely to affect the Sri Lankan bank’s ratings, says Fitch Ratings. We believe the acquisition, if it proceeds, would have only a modest impact on HNB’s capital.
HNB announced on 26 August 2024 that it has made a non-binding offer on the acquisition. This is after Bank Asia Limited (Bangladesh) made a similar non-binding offer in April 2024. Both offers have been accepted in principle, subject to compliance with all applicable laws and regulations. The next step is central bank approval for commencement of the due diligence process.
We see limited downside pressure on HNB’s capitalisation metrics should the acquisition proceed. At end-2023, BAFL had assets totalling nearly LKR80 billion and equity amounting to LKR15.5 billion. This is about 5% of HNB’s assets and 8% of its equity at the bank level, indicating that the possible acquisition is small relative to HNB’s overall size. We estimate the acquisition would lead to less than a 1pp drop in HNB’s capital ratios due to an increase in risk-weighted assets.
from The Island https://ift.tt/pSNAIfK
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