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FITCH RATINGS AFFIRMS VTB BANK ARMENIA AT 'BB+' AND ACBA-CREDIT AGRICOLE BANK AT 'BB'
PanARMENIAN.Net
04.05.2009 15:02 GMT+04:00
Fitch ratings has on April 30 affirmed two Armenian banks, VTB Bank
Armenia (VTBA) and ACBA-Credit Agricole Bank (ACBA), at Long-term
Issuer Default (IDR) 'BB+' and 'BB', respectively.
The outlooks on both banks are Stable. The Individual Ratings of VTB
A and ACBA have been also affirmed at 'D/E' and 'D', respectively. A
full list of rating actions is provided at the end of this commentary.
The IDRs of both banks reflect Fitch's view of the moderate probability
of support being forthcoming, if required, from their owners. Fitch
believes Russia's JSC VTB Bank (VTB; 'BBB'/Negative) would have a
strong propensity to support VTB A, in case of need, due to its 100%
ownership, the strategic importance of CIS markets for VTB and the
small size of VTB A relative to its parent.
In respect to ACBA, the probability of support being forthcoming
from Credit Agricole (CA; 'AA-' (AA minus)/Stable) is undermined by
CA's minority stake (28%) and the fact that the Armenian market does
not appear to be of high importance for CA; these considerations
are reflected in the lower Long-term IDR of ACBA, relative to VTB
A. Nevertheless, support is factored into the ratings of ACBA due to
brand association, the close involvement of CA in establishing and
supervising ACBA and ACBA's relatively small size.
The Individual Ratings of both banks reflect rapid loan growth in
recent years, the high proportion of foreign currency loans and
the high-risk operating environment, but also take into account
the solid capitalisation of both banks and their broad domestic
franchises. However, the high concentration of VTB A's loan book, its
relatively high exposure to the vulnerable construction sector, the
somewhat higher current loan impairment level, larger tier 2 component
in capital and much higher reliance on shareholder funding/liquidity
support make the bank weaker on a standalone basis, which is reflected
in its Individual Rating of 'D/E'. The Individual Rating of ACBA at
'D' considers the high granularity of its loan portfolio, diversified
funding base and stable liquidity position, high profitability and
good corporate governance.
ACBA is Armenia's largest bank by assets and loans, with market shares
of 12% and 13%, respectively, at end-2008. It has a leading position
in agricultural lending with a 71% market share. The biggest stake
in the bank is owned by CA and the remainder is distributed among 10
regional agricultural unions.
VTBA held 11% of sector loans and 5.9% of retail deposits at
end-2008. The bank has an extensive branch network covering all
regions of Armenia and is 100%-owned by VTB, finchannel.com reported.
PanARMENIAN.Net
04.05.2009 15:02 GMT+04:00
Fitch ratings has on April 30 affirmed two Armenian banks, VTB Bank
Armenia (VTBA) and ACBA-Credit Agricole Bank (ACBA), at Long-term
Issuer Default (IDR) 'BB+' and 'BB', respectively.
The outlooks on both banks are Stable. The Individual Ratings of VTB
A and ACBA have been also affirmed at 'D/E' and 'D', respectively. A
full list of rating actions is provided at the end of this commentary.
The IDRs of both banks reflect Fitch's view of the moderate probability
of support being forthcoming, if required, from their owners. Fitch
believes Russia's JSC VTB Bank (VTB; 'BBB'/Negative) would have a
strong propensity to support VTB A, in case of need, due to its 100%
ownership, the strategic importance of CIS markets for VTB and the
small size of VTB A relative to its parent.
In respect to ACBA, the probability of support being forthcoming
from Credit Agricole (CA; 'AA-' (AA minus)/Stable) is undermined by
CA's minority stake (28%) and the fact that the Armenian market does
not appear to be of high importance for CA; these considerations
are reflected in the lower Long-term IDR of ACBA, relative to VTB
A. Nevertheless, support is factored into the ratings of ACBA due to
brand association, the close involvement of CA in establishing and
supervising ACBA and ACBA's relatively small size.
The Individual Ratings of both banks reflect rapid loan growth in
recent years, the high proportion of foreign currency loans and
the high-risk operating environment, but also take into account
the solid capitalisation of both banks and their broad domestic
franchises. However, the high concentration of VTB A's loan book, its
relatively high exposure to the vulnerable construction sector, the
somewhat higher current loan impairment level, larger tier 2 component
in capital and much higher reliance on shareholder funding/liquidity
support make the bank weaker on a standalone basis, which is reflected
in its Individual Rating of 'D/E'. The Individual Rating of ACBA at
'D' considers the high granularity of its loan portfolio, diversified
funding base and stable liquidity position, high profitability and
good corporate governance.
ACBA is Armenia's largest bank by assets and loans, with market shares
of 12% and 13%, respectively, at end-2008. It has a leading position
in agricultural lending with a 71% market share. The biggest stake
in the bank is owned by CA and the remainder is distributed among 10
regional agricultural unions.
VTBA held 11% of sector loans and 5.9% of retail deposits at
end-2008. The bank has an extensive branch network covering all
regions of Armenia and is 100%-owned by VTB, finchannel.com reported.