December 20, 2017 / 9:04 AM / a year ago

Fitch Places Certain CIS Banks on Rating Watch on Proposed Criteria Change

(The following statement was released by the rating agency) MOSCOW/LONDON, December 20 (Fitch) Fitch Ratings has taken the following rating actions on certain CIS banks: - The 'CCC' Long-Term Issuer Default Ratings (IDRs) and 'ccc' Viability Ratings (VRs) of Atabank OJSC (Azerbaijan) and Orient Express Bank (OEB, Russia) and the 'ccc' VRs of International Bank of Azerbaijan (IBA), PJSC Alfa-Bank (Ukraine) and Ukrsotsbank (Ukraine) have been placed on Rating Watch Evolving (RWE) - The 'CC' subordinated debt rating of JSC The State Export-Import Bank of Ukraine (Ukreximbank) (issued by SPV Biz Finance PLC) has been placed on Rating Watch Positive (RWP) - The 'CCC' Long-Term IDRs of PJSC Asian-Pacific Bank (APB, Russia) and Uraltransbank (UTB, Russia) have been maintained on Rating Watch Negative (RWN). A full list of rating actions is at the end of this commentary. KEY RATING DRIVERS The rating actions are driven by the publication of the Exposure Draft of Fitch's revised Bank Rating Criteria on 12 December 2017. As outlined in the Exposure Draft, Fitch plans to introduce + and - modifiers at the 'CCC'/'ccc' level for Long-Term Issuer Default Ratings (IDRs), long-term international debt and deposit ratings, Derivative Counterparty Ratings (DCRs) and VRs. The revised criteria also propose new guidelines for notching of subordinated and hybrid instruments. The Rating Watches reflect the potential for rating actions to be taken after the finalisation and publication of the revised Bank Rating Criteria. RATING SENSITIVITIES The RWE on the ratings of Atabank OJSC, OEB, PJSC Alfa-Bank, Ukrsotsbank and IBA reflects the fact that Fitch could upgrade (to CCC+/ccc+), affirm (at CCC/ccc) or downgrade (to CCC-/ccc-) the ratings depending on the agency's assessments of the banks' risk profiles within the 'CCC'/'ccc' range. We placed the Long-Term IDRs of APB and UTB on RWN in 2017 to reflect significant near-term uncertainty with respect to the banks' ability to fully comply with regulatory requirements given their capital shortfall and hence the risk of regulatory intervention. The RWN on the ratings continues to reflect these risks, and now also reflects the possibility that the ratings will be downgraded to 'CCC-' following the publication of the Criteria. The subordinated debt of Ukreximbank, issued by SPV Biz Finance PLC, is currently rated 'CC', two notches below the bank's VR of 'b-'. The RWE on the rating reflects the fact that following the finalisation of the criteria it will likely be upgraded to either 'CCC' or 'CCC-' to be consistent with the revised guidelines for notching of subordinated and hybrid instruments included in the Exposure Draft. Fitch will resolve the Rating Watches following the publication of the final criteria in line with the Exposure Draft. Furthermore, the Rating Watch on APB and UTB's IDRs could be resolved and the ratings downgraded if they are unable to fulfil their capital rectification plans, resulting in regulatory intervention. Conversely, the IDRs could stabilise at their current levels, or ultimately be upgraded, if the banks are able to rebuild their capital. The rating actions are as follows: Atabank OJSC Foreign-Currency Long-Term IDR: 'CCC', placed on RWE Viability Rating: 'ccc', placed on RWE Orient Express Bank Foreign- and Local-Currency Long-Term IDRs: 'CCC', placed on RWE Viability Rating: 'ccc', placed on RWE Open Joint Stock Company International Bank of Azerbaijan Viability Rating: 'ccc', placed on RWE PJSC Alfa-Bank Viability Rating: 'ccc', placed on RWE Ukrsotsbank Viability Rating: 'ccc', placed on RWE PJSC Asian-Pacific Bank Foreign- and Local-Currency Long Term IDRs: 'CCC', maintained on RWN Uraltransbank Foreign-Currency Long-Term IDR: 'CCC', maintained on RWN Ukreximbank (issuer Biz Finance PLC) Subordinated debt: 'CC' , placed on RWP The other ratings of these banks are unaffected. Contact: Primary Analysts Alexander Danilov (APB) Senior Director +7 495 956 2408 Fitch Ratings CIS Limited 26 Valovaya Street, Moscow 115054 Anton Lopatin (PJSC Alfa-Bank, Ukrsotsbank, Ukreximbank (Biz Finance PLC)) Director +7 495 956 7096 Fitch Ratings CIS Limited 26 Valovaya Street, Moscow 115054 Alyona Agrenenko (OEB) Associate Director +7 495 956 2409 Fitch Ratings CIS Limited 26 Valovaya Street, Moscow 115054 Ruslan Bulatov (Atabank, UTB, IBA) Associate Director +7 495 956 9982 Fitch Ratings CIS Limited 26 Valovaya Street, Moscow 115054 Secondary Analysts Alexander Danilov (Atabank, IBA) Senior Director +7 495 956 2408 Anna Erachina (PJSC Alfa-Bank, Ukrsotsbank, Ukreximbank (Biz Finance PLC)) Associate Director +7 495 956 7063 Ruslan Bulatov (APB) Associate Director +7 495 956 9982 Ilya Sarzhin (OEB) Analyst +7 495 956 9983 Konstantin Alekseenko (UTB) Analyst +7 495 956 2401 Committee Chairperson James Watson Managing Director +7 495 956 6657 Media Relations: Julia Belskaya von Tell, Moscow, Tel: +7 495 956 9908, Email:; Peter Fitzpatrick, London, Tel: +44 20 3530 1103, Email: Additional information is available on Applicable Criteria Global Bank Rating Criteria (pub. 25 Nov 2016) here Additional Disclosures Solicitation Status here Endorsement Policy here ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. 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