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Moody's Downgrades Two Armenian Banks' Ratings

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  • Moody's Downgrades Two Armenian Banks' Ratings

    MOODY'S DOWNGRADES TWO ARMENIAN BANKS' RATINGS

    Financial Mirror
    Oct 22 2009
    Cyprus

    Moody's Investors Service downgraded Thursday the long-term global
    local currency (GLC) deposit ratings of two Armenian banks --
    ACBA-Credit Agricole and Ardshininvestbank -- to Ba2 from Ba1. The
    outlook on all ratings of both banks is now stable.

    Like most governments, the Armenian authorities are at least as (if not
    more) likely to support their banking system as they are to service
    their own debt, a view that has traditionally led to bank ratings
    benefiting from significant uplift. However, Moody's believes it is
    more appropriate to use the government's debt rating as a reference
    rating to measure its ability to provide public support to banks,
    instead of the local currency deposit ceiling, as previously.

    Consequently, Armenia's systemic support indicator is Ba1, one notch
    above the government's Ba2 local currency bond rating. As a result,
    their GLC deposit ratings now receive a one-notch uplift from their
    respective Ba3 baseline credit assessments, the measure of their
    intrinsic or standalone financial strength.

    The bank financial strength ratings (BFSRs) of ACBA-Credit Agricole
    and Ardshininvestbank are unaffected as Moody's believes that their
    adequate capitalisation enables them to absorb a level of stress in
    line with current loss assumptions.

    Headquartered in Yerevan, ACBA-Credit Agricole and Ardshininvestbank
    had total assets of AMD 140 bln (USD 391 mln) and AMD 115 bln (USD
    320 mln), respectively, as at the end of June 2009.
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