The JCR-VIS Credit Rating Company Limited (JCR-VIS) has revised the ratings of Crescent Commercial Bank Limited (CCBL) to BBB/A2 (Triple B/ A Two). The ratings will be on a 'Rating Watch' for an interim period owing to the CCBL board's resolution to consider the merger with the Pakistan Industrial Credit and Investment Corporation (Picic) and the Picic Commercial Bank in line with the directives issued by the State Bank of Pakistan (SBP).
The JCR-VIS has noted that the bank has been selected for a strategic investment by Actis
Capital LLP (Actis), a leading private equity investor in emerging markets with approximately $3 billion currently under management, and is awaiting SBP approval.
The proposed transaction will offer Actis a 25 percent share of the bank, which would be subject to due diligence, regulatory approvals, and subscription by the remaining CCBL's sponsors.
The positive impact of this strategic investment would be incorporated in the JCR-VIS ratings soon after the finalisation of the sale and purchase agreement and upon the quantum of equity to be injected in the bank becoming known.
The JCR-VIS has also noted that following the change in senior management last year, significant emphasis has been laid on implementing systems and controls, risk management and monitoring, and strengthening of various management cadres. This process is already underway.
The substantial amount of provisions were made against non-performing assets during 2005, and the sponsors indicated their timely support by re-capitalising the bank to the required level.
The JCR-VIS will continue to monitor the management's efforts towards the strategic investment by Actis, strengthening of the core management team, and procurement of new business and will incorporate the impact on ratings accordingly soon thereafter.
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