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STB [SELL -21.1%] – M&A sets course for years of recaps – Update

Whether one adopts our approach to modelling or STB’s own provision expense forecasts, the implication is for years of recapitalisations and a drastic scaling down of its ability to pay cash dividends. Our own take on matters is that after a bout of initial pain we think there is a high probability of facing a second round of pain when STB’s existing restructured loans come due (we model for 2018).