Contact us (+ 7 (921) 446-25-10)
×
Texting is available for authorized users.
Please register or log in at the website.
×
Your request for online training has been sent. Cbonds managers will be in touch with you shortly. Thank you!

Fitch Downgrades 9 Ukrainian Banks; Outlooks Negative

November 15, 2013 | Fitch Ratings

Fitch Ratings has downgraded the foreign currency Long-term Issuer Default ratings (IDRs) of JSC The State Export-Import Bank of Ukraine (Ukreximbank), JSC State Savings Bank of Ukraine (Oschadbank), PJSC CB PrivatBank (Privat), Public Joint Stock Company UkrSibbank, Ukrsotsbank (Ukrsots), PJSC VTB Bank (VTBU), ProCredit Bank (Ukraine), PJSCCB Pravex-Bank (Pravex) and PJSC Credit Agricole Bank (CAB) to 'B-' from 'B'. The Outlooks on the Long-term IDRs are Negative. At the same time, the agency has affirmed the Long-term IDRs of PJSC Alfa-Bank (ABU) and Pivdennyi Bank (PB) at 'B-' and revised the Outlooks to Negative from Stable. A full list of rating actions is at the end of this rating action commentary.
KEY RATING DRIVERS - IDRS, SENIOR DEBT, SUPPORT RATINGS AND SUPPORT RATING FLOORS
The rating actions follow Fitch's downgrade of Ukraine's Long-term foreign and local currency IDRs to 'B-' from 'B' with a Negative Outlook. The Country Ceiling was also downgraded to 'B-' from 'B' (see 'Fitch Downgrades Ukraine to 'B-'; Outlook Negative' dated 08 November 2013 at www.fitchratings.com).
The downgrades of Oschadbank and Ukreximbank reflect the reduced ability of the government to provide support in case of need, as reflected by the downgrade of Ukraine's Long-term IDRs. In Ukreximbank's case, the downgrade of the Long-term IDRs also reflects the downgrade of the bank's Viability Rating (VR), which is closely linked to the sovereign credit profile. Fitch still believes the authorities' propensity to provide support to Oschadbank and Ukreximbank would be high, based on their 100%-state ownership, policy roles, high systemic importance, and the track record of capital support for the banks under different governments.
The downgrade of PrivatBank's Long-term IDR reflects the downgrade of the bank's VR.
The downgrades of the foreign currency Long-term IDRs of UkrSibbank, Ukrsots, VTBU, ProCredit Ukraine, Pravex and CAB are in line with the downgrade of Ukraine's Country Ceiling, which reflects Fitch's view of the increased risk of transfer and convertibility restrictions being introduced. Such restrictions could limit the extent to which support from the majority foreign shareholders of these banks could be utilised to service the banks' obligations. The banks' 'B' Long-term local currency IDRs also take into account Ukrainian country risks.
The IDRs, Support and senior debt ratings of these six banks are driven by the likelihood of support the banks may receive from their majority shareholders. UkrSibbank is 85%-owned by BNP Paribas (A+/Stable); Ukrsots is 98.64%-owned by UniCredit S.p.A. (BBB+/Negative) through its Vienna subsidiary UniCredit Bank Austria AG (A/Stable); VTBU is more than 99%-owned by Russia's JSC Bank VTB (BBB/Negative); ProCredit Ukraine is controlled (60% of voting stock) by Germany's ProCredit Holding AG & Co. KGaA. (BBB-/Stable); Pravex is fully owned by Intesa Sanpaolo S.p.A. (BBB+/Negative); and CAB is fully owned by Credit Agricole S.A. (A/Stable).
The Negative Outlooks on the above nine banks, and the revision of the Outlooks on the Long-term IDRs of ABU and PB to Negative, reflect the potential for a further downgrade of Ukraine's Country Ceiling given the Negative Outlook on Ukraine's sovereign ratings. PB's ratings are driven by its standalone credit strength, as captured by its VR. ABU's IDRs and senior debt ratings are driven by Fitch's view on potential support the bank may receive from other assets controlled by its main shareholders, including from its sister bank, Russia-based OJSC Alfa-Bank (AB; BBB-/Stable), which holds a minority 19.9% stake in ABU.
RATING SENSITIVITIES - IDRS, SENIOR DEBT, SUPPORT RATING FLOORS
The Long-term IDRs and senior debt ratings of all 11 banks, and the Support Rating Floors of Ukreximbank and Oschadbank, could be downgraded further if Ukraine's Country Ceiling was downgraded again as a result of a sovereign downgrade.
UkrSibbank, Ukrsots, Pravex, VTBU and ABU could also be downgraded if they were sold to weaker shareholders. In Fitch's view, UkrSibbank, Ukrsots and Pravex are of limited importance for their groups' franchises, and the sales of these banks cannot be excluded over the medium term. However, VTBU and ABU represent more strategic holdings of their owners, in Fitch's view, making disposals less likely. The foreign currency Long-term IDRs of CAB and ProCredit Ukraine are underpinned by their VRs, and so would not be downgraded even in the (unlikely) event of the banks being sold.
Privat and PB, whose IDRs are driven by their VRs, could also be downgraded in case of a sharp deterioration in their standalone credit profiles, in particular a major asset quality deterioration or a loss of liquidity.
A revision of the sovereign Outlook to Stable would help the ratings of all 11 banks to stabilise at their current levels.
KEY RATING DRIVERS - VRS
The downgrades of the VRs of Ukreximbank, Privat and CAB to 'b-' from 'b' reflect Fitch's view that in common with other banks in Ukraine, these banks have limited resilience to risks stemming from the deteriorating sovereign credit profile and operating environment. Banks' asset quality, capital and liquidity positions are likely to be highly sensitive to the performance of the economy and any marked depreciation of the Ukrainian hryvna.
The downgrade of Ukreximbank's VR also reflects the significant correlation between the bank's and the sovereign credit profiles, notwithstanding the sizable capital buffer, due to (i) the bank's large exposure to sovereign debt and the public sector more generally, and some risk that this exposure could grow in case of increased stress; and (ii) the likelihood that refinancing challenges relating to the bank's maturing external debt would increase in case of a sovereign default.
The affirmation of Oschadbank's and PB's VRs at 'b-', reflects limited changes in the banks' standalone credit profiles since their last reviews in July 2013 (see 'Fitch Affirms Ukreximbank & Oschadbank at 'B'; Revises Outlooks to Negative' dated 09 July 2013 and 'Fitch Affirms Two Privately-Owned Ukrainian Banks' dated 15 July 2013 at www.fitchratings.com).
RATING SENSITIVITIES - VRS
The 'b-' VRs of Ukreximbank, Oschadbank, Privat, CAB, PB and ProCredit Ukraine could be further downgraded in case of a sharp deterioration in their standalone credit metrics and/or Fitch's expectation that deterioration is likely as a result of continued weakening of the operating environment. Stabilisation of the operating environment would reduce downward pressure on the ratings.
KEY RATING DRIVERS AND SENSITIVITIES - UKREXIMBANK'S SUBORDINATED DEBT
The downgrade of Ukreximbank's subordinated debt rating reflects the downgrade of the bank's VR. The rating is sensitive to any further changes in the bank's VR.
KEY RATING DRIVERS AND SENSITIVITIES - NATIONAL RATINGS
The affirmation of the banks' National Ratings with Stable Outlooks reflects Fitch's view that the creditworthiness of the banks relative to each other and to other Ukrainian issuers has not changed significantly as a result of the sovereign downgrade.
The rating actions are as follows:

Ukreximbank:
Long-term IDR: downgraded to 'B-' from 'B'; Outlook Negative
Senior unsecured debt of Biz Finance PLC: downgraded to 'B-'from 'B'; Recovery Rating 'RR4'
Subordinated debt: downgraded to 'CC' from 'CCC'; Recovery Rating 'RR5'
Short-term IDR: affirmed at 'B'
Support Rating: downgraded to '5' from '4'
Support Rating Floor: revised to 'B-' from 'B'
VR: downgraded to 'b-' from 'b'
National Long-term rating: affirmed at 'AA-(ukr)'; Outlook Stable

Oschadbank:
Long-term foreign and local currency IDRs: downgraded to 'B-' from 'B'; Outlook Negative
Senior unsecured debt of SSB No.1 PLC: downgraded to 'B-' from 'B'; Recovery Rating 'RR4'
Short-term foreign currency IDR: affirmed at 'B'
Support Rating: downgraded to '5' from '4'
Support Rating Floor: revised to 'B-' from 'B'
VR: affirmed at 'b-'
National Long-term rating: affirmed at 'AA-(ukr)'; Outlook Stable

PJSC CB PrivatBank:
Long-term IDR: downgraded to 'B-' from 'B'; Outlook Negative
Senior unsecured debt of UK SPV Credit Finance plc: downgraded to 'B-'from 'B'; Recovery Rating 'RR4'
Short-term IDR: affirmed at 'B'
Support Rating: affirmed at '5'
Support Rating Floor: affirmed at 'No Floor'
VR: downgraded to 'b-' from 'b'
National Long-term rating: affirmed at 'A-(ukr)'; Outlook Stable

PJSC UkrSibbank:
Long-Term foreign currency IDR: downgraded to 'B-' from 'B'; Outlook Negative
Long-term local currency IDR: downgraded to 'B' from 'B+', Outlook Negative
Senior unsecured local currency debt: downgraded to 'B'/'RR4' from 'B+', affirmed at 'AAA(ukr)'
Short-Term foreign currency IDR: affirmed at 'B'
Support Rating: downgraded to '5' from '4'
VR: 'cc', not affected
National Long-Term rating: affirmed at 'AAA(ukr)', Outlook 'Stable'

Ukrsotsbank:
Long-term foreign currency IDR: downgraded to 'B-' from 'B'; Outlook Negative
Long-term local currency IDR: downgraded to 'B' from 'B+', Outlook Negative
Senior unsecured local currency debt: downgraded to 'B'/'RR4' from 'B+', affirmed at 'AAA(ukr)'
Upcoming senior unsecured local currency debt: downgraded to 'B(EXP)'/'RR4' from 'B+ (EXP)', affirmed at 'AAA (EXP)(ukr)'
Short-term foreign currency IDR: affirmed at 'B'
Support Rating: downgraded to '5' from '4'
VR: 'ccc', not affected
National Long-term rating: affirmed at 'AAA(ukr)'; Outlook Stable

PJSC VTB Bank:
Long-term foreign currency IDR: downgraded to 'B-' from 'B'; Outlook Negative
Long-term local currency IDR: downgraded to 'B' from 'B+', Outlook Negative
Senior unsecured local currency debt: downgraded to 'B'/'RR4' from 'B+', affirmed at 'AAA(ukr)'
Short-term foreign currency IDR: affirmed at 'B'
Support Rating: downgraded to '5' from '4'
VR: 'ccc', not affected
National Long-term rating: affirmed at 'AAA(ukr)'; Outlook Stable

ProCredit Bank (Ukraine):
Long-Term foreign currency IDR: downgraded to 'B-' from 'B'; Outlook Negative
Long-term local currency IDR: downgraded to 'B' from 'B+', Outlook Negative
Senior unsecured local currency debt: downgraded to 'B'/'RR4' from 'B+', affirmed at 'AAA(ukr)'
Short-Term foreign and local currency IDRs: affirmed at 'B'
Support Rating: downgraded to '5' from '4'
VR: 'b-', not affected
National Long-Term rating affirmed at 'AAA(ukr)', Outlook 'Stable'

Pravex:
Long-term foreign currency IDR: downgraded to 'B-' from 'B'; Outlook Negative
Long-term local currency IDR: downgraded to 'B' from 'B+', Outlook Negative
Short-term foreign currency IDR: affirmed at 'B'
Support Rating: downgraded to '5' from '4'
VR: 'ccc', not affected
National Long-term rating: affirmed at 'AAA(ukr)'; Outlook Stable

CAB:
Long-term foreign currency IDR: downgraded to 'B-' from 'B'; Outlook Negative
Long-term local currency IDR: downgraded to 'B' from 'B+', Outlook Negative
Short-term foreign and local currency IDRs: affirmed at 'B'
Support Rating: downgraded to '5' from '4'
VR: downgraded to 'b-' from 'b'
National Long-term Rating: affirmed at 'AAA(ukr)', Outlook Stable

PJSC Alfa-Bank:
Long-term foreign and local currency IDRs: affirmed at 'B-', Outlook revised to Negative from Stable
Senior unsecured local currency debt: affirmed at 'B-'/'RR4' and 'BBB-(ukr)'
Upcoming senior unsecured local currency debt: affirmed at 'B-(EXP)'/'RR4' and 'BBB-(EXP)(ukr) '
Senior unsecured debt of Alfa Ukrfinance LLC: affirmed at 'B-'; Recovery Rating 'RR4'
Short-term IDR: affirmed at 'B'
Support Rating: affirmed at '5'
VR: 'ccc', not affected
National Long-term rating: affirmed at 'BBB-(ukr)', Outlook Stable

Pivdennyi Bank
Long-term IDR: affirmed at 'B-'; Outlook revised to Negative from Stable
Short-term IDR: affirmed at 'B'
Support Rating: affirmed at '5'
Support Rating Floor: affirmed at 'No Floor'
VR: affirmed at 'b-'

Company: Pivdenny Bank

Full company namePublic Company Bank "Pivdenny"
Country of riskUkraine
Country of registrationUkraine
IndustryBanks

Share:

Similar news:
minimizeexpand
Cbonds is a global fixed income data platform
  • Cbonds is a global data platform on bond market
  • Coverage: more than 170 countries and 250,000 domestic and international bonds
  • Various ways to get data: descriptive data and bond prices - website, xls add-in, mobile app
  • Analytical functionality: bond market screener, Watchlist, market maps and other tools
×