MOODY'S PLACES ON REVIEW FOR POSSIBLE DOWNGRADE VALUT-TRANZIT BANK'S (KAZAKHSTAN) B1/E+ RATINGS; AFFIRMS Not-Prime SHORT-TERM FOREIGN CURRENCY DEPOSIT RATING
April 28, 2006
Moody's Investors Service has placed on review
for possible downgrade the B1 long-term foreign currency deposit rating
and the E+ Financial Strength Rating (FSR) of Valut-Tranzit Bank
(Kazakhstan). The Not-Prime short-term foreign currency deposit rating
is not affected by this rating action.
This rating action reflects (i) Moody's expectations regarding
deterioration in the bank's financial fundamentals, namely asset quality,
in 2005 on the back of more strict evaluation of risks inherent to the
bank's lending activities (release of the 2005 audited IFRS financials
has been somewhat delayed); (ii) the failure of two attempts to sell the
bank to outside investors which could have helped to re-capitalise the
bank if need be; (iii) the build-up of negative publicity which increases
the level of jitteriness among the bank's depositors and creditors and
reduces their level of confidence. According to the bank's senior
management, there has been no material pressure on liquidity or loss of
customers in the first quarter of 2006.
At the same time, Moody's notes that there are a few positive factors
underpinning the ratings at their current level rather than prompting a
straight downgrade to a lower level. Firstly, we believe that even if the
bank were to get into financial difficulties a fair degree of external
support may be forthcoming from the authorities and/or outside investors
though its extent and timeliness are uncertain. Secondly, there is no
evidence that the bank is not a going concern.
The review will focus on Valut-Tranzit Bank's financial performance,
liquidity and solvency, ability to manage its business and defend its
franchise under the adverse business conditions described above. We will
also try to ascertain which external support mechanisms from outside
investors and/or authorities are available to the bank. This review is
expected to be concluded within the next few months.
Headquartered in Karaganda, Northern Kazakhstan, Valut-Tranzit Bank
reported total assets of US$378 million at year-end 2004 under IFRS
Company — Valut-Transit Bank
Full nameOpen Joint Stock Company "Valut-Transit Bank"