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Moodys.com (press release)
Jan 19 2015
Moody's downgrades two Armenian banks' ratings; outlooks changed to
negative from stable
Global Credit Research - 19 Jan 2015
London, 19 January 2015 -- Moody's Investors Service has today
downgraded the long-term local-currency deposit and foreign-currency
senior unsecured debt ratings of Ardshinbank to Ba3 from Ba2, and
downgraded Ardshinbank's and VTB Bank (Armenia)'s foreign-currency
deposit ratings to B1 from Ba3. The outlook on the two banks' ratings
has been changed to negative from stable. These actions follow the
weakening of Armenia's credit profile, as reflected in the downgrade
of Armenia's government debt rating to Ba3 from Ba2 on 15 January
2015, as well as the country ceiling for foreign-currency deposits to
B1 from Ba3. For additional information, please refer to the related
announcement: https://www.moodys.com/research/--PR_316326
RATINGS RATIONALE
ARDSHINBANK
The downgrade of Armenia's government debt rating with a negative
outlook has prompted a downgrade of Ardshinbank's supported ratings,
which, before the downgrade, benefited from one notch of government
(systemic) support uplift. While Moody's considers that the Armenian
government will remain willing to assist Ardshinbank in the event of
need (because of its systemic importance), the government's capacity
to do so has lessened, as expressed by the downgrade of the government
debt rating to Ba3 from Ba2. Therefore, Moody's expectation of
systemic support does not result in any uplift for Ardshinbank's
local-currency deposit and foreign-currency debt ratings, which are
now solely based on the bank's baseline credit assessment (BCA) of
ba3.
At the same time, Moody's affirmed and changed to negative the outlook
on Ardshinbank's standalone bank financial strength rating (BFSR) of
D- (equivalent to ba3 BCA), reflecting the outlook on the sovereign
rating. Given the bank's exposure to the deterioration in Armenia's
operating environment, the bank's standalone credit profile is likely
to be influenced by the pressures on its asset quality and
profitability in the medium term. Thus, all Ardshinbank's ratings
carry a negative outlook.
VTB BANK (ARMENIA)
Moody's affirmed and changed to negative the outlook on VTB Bank
(Armenia)'s standalone BFSR of D- (equivalent to ba3 BCA) and its
supported local-currency deposit rating of Ba2, reflecting the outlook
on the sovereign rating. Given the bank's exposure to the
deterioration in Armenia's operating environment, the bank's
standalone credit profile is likely to be influenced by the pressures
on its asset quality and profitability. Furthermore, the bank's
stand-alone credit assessment is closely linked with VTB Bank, JSC's
stand-alone credit standing (BFSR of D- on review for downgrade,
equivalent to ba3 BCA) as it represent an integral part of the group's
franchise and business activity.
-- DOWNGRADE OF THE TWO ARMENIAN BANKS' FOREIGN-CURRENCY DEPOSIT RATINGS
The downgrade of the long-term foreign-currency deposit ratings of
Ardshinbank and VTB Bank (Armenia) takes into account the lowering of
Armenia's foreign-currency deposit ceiling to B1 from Ba3 on 15
January 2015. Moody's foreign-currency ceilings determine the highest
rating possible in a given country for debt instruments denominated in
foreign currency issued by domestic borrowers other than the national
government.
WHAT COULD MOVE THE RATINGS UP/DOWN
The negative rating outlooks imply that upward pressure on the
long-term debt and deposit ratings of Ardshinbank and VTB Bank
(Armenia) is unlikely in the next 12 months.
Moody's might downgrade the ratings of Ardshinbank and VTB Bank
(Armenia) further if Moody's observes any evidence of erosion of the
risk-absorption capacity and financial fundamentals of the affected
entities. This could stem, for example, from increasing challenges
within the domestic operating environment. Conversely, improvements in
Armenia's economic growth prospects could stabilise the ratings of
these two banks at the current levels.
The principal methodology used in these ratings was Global Banks
published in July 2014. Please see the Credit Policy page on
www.moodys.com for a copy of this methodology.
REGULATORY DISCLOSURES
For ratings issued on a program, series or category/class of debt,
this announcement provides certain regulatory disclosures in relation
to each rating of a subsequently issued bond or note of the same
series or category/class of debt or pursuant to a program for which
the ratings are derived exclusively from existing ratings in
accordance with Moody's rating practices. For ratings issued on a
support provider, this announcement provides certain regulatory
disclosures in relation to the rating action on the support provider
and in relation to each particular rating action for securities that
derive their credit ratings from the support provider's credit rating.
For provisional ratings, this announcement provides certain regulatory
disclosures in relation to the provisional rating assigned, and in
relation to a definitive rating that may be assigned subsequent to the
final issuance of the debt, in each case where the transaction
structure and terms have not changed prior to the assignment of the
definitive rating in a manner that would have affected the rating. For
further information please see the ratings tab on the issuer/entity
page for the respective issuer on www.moodys.com.
For any affected securities or rated entities receiving direct credit
support from the primary entity(ies) of this rating action, and whose
ratings may change as a result of this rating action, the associated
regulatory disclosures will be those of the guarantor entity.
Exceptions to this approach exist for the following disclosures, if
applicable to jurisdiction: Ancillary Services, Disclosure to rated
entity, Disclosure from rated entity.
Regulatory disclosures contained in this press release apply to the
credit rating and, if applicable, the related rating outlook or rating
review.
Please see www.moodys.com for any updates on changes to the lead
rating analyst and to the Moody's legal entity that has issued the
rating.
Please see the ratings tab on the issuer/entity page on www.moodys.com
for additional regulatory disclosures for each credit rating.
Elena Redko
Asst Vice President - Analyst
Financial Institutions Group
Moody's Investors Service Limited, Russian Branch
7th floor, Four Winds Plaza
21 1st Tverskaya-Yamskaya St.
Moscow 125047
Russia
Telephone: +7 495 228 6060
Facsimile: +7 495 228 6091
Yves J Lemay
MD - Banking
Financial Institutions Group
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454
Releasing Office:
Moody's Investors Service Ltd.
One Canada Square
Canary Wharf
London E14 5FA
United Kingdom
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454
https://www.moodys.com/research/Moodys-downgrades-two-Armenian-banks-ratings-outlooks-changed-to-negative--PR_316374
From: A. Papazian
Jan 19 2015
Moody's downgrades two Armenian banks' ratings; outlooks changed to
negative from stable
Global Credit Research - 19 Jan 2015
London, 19 January 2015 -- Moody's Investors Service has today
downgraded the long-term local-currency deposit and foreign-currency
senior unsecured debt ratings of Ardshinbank to Ba3 from Ba2, and
downgraded Ardshinbank's and VTB Bank (Armenia)'s foreign-currency
deposit ratings to B1 from Ba3. The outlook on the two banks' ratings
has been changed to negative from stable. These actions follow the
weakening of Armenia's credit profile, as reflected in the downgrade
of Armenia's government debt rating to Ba3 from Ba2 on 15 January
2015, as well as the country ceiling for foreign-currency deposits to
B1 from Ba3. For additional information, please refer to the related
announcement: https://www.moodys.com/research/--PR_316326
RATINGS RATIONALE
ARDSHINBANK
The downgrade of Armenia's government debt rating with a negative
outlook has prompted a downgrade of Ardshinbank's supported ratings,
which, before the downgrade, benefited from one notch of government
(systemic) support uplift. While Moody's considers that the Armenian
government will remain willing to assist Ardshinbank in the event of
need (because of its systemic importance), the government's capacity
to do so has lessened, as expressed by the downgrade of the government
debt rating to Ba3 from Ba2. Therefore, Moody's expectation of
systemic support does not result in any uplift for Ardshinbank's
local-currency deposit and foreign-currency debt ratings, which are
now solely based on the bank's baseline credit assessment (BCA) of
ba3.
At the same time, Moody's affirmed and changed to negative the outlook
on Ardshinbank's standalone bank financial strength rating (BFSR) of
D- (equivalent to ba3 BCA), reflecting the outlook on the sovereign
rating. Given the bank's exposure to the deterioration in Armenia's
operating environment, the bank's standalone credit profile is likely
to be influenced by the pressures on its asset quality and
profitability in the medium term. Thus, all Ardshinbank's ratings
carry a negative outlook.
VTB BANK (ARMENIA)
Moody's affirmed and changed to negative the outlook on VTB Bank
(Armenia)'s standalone BFSR of D- (equivalent to ba3 BCA) and its
supported local-currency deposit rating of Ba2, reflecting the outlook
on the sovereign rating. Given the bank's exposure to the
deterioration in Armenia's operating environment, the bank's
standalone credit profile is likely to be influenced by the pressures
on its asset quality and profitability. Furthermore, the bank's
stand-alone credit assessment is closely linked with VTB Bank, JSC's
stand-alone credit standing (BFSR of D- on review for downgrade,
equivalent to ba3 BCA) as it represent an integral part of the group's
franchise and business activity.
-- DOWNGRADE OF THE TWO ARMENIAN BANKS' FOREIGN-CURRENCY DEPOSIT RATINGS
The downgrade of the long-term foreign-currency deposit ratings of
Ardshinbank and VTB Bank (Armenia) takes into account the lowering of
Armenia's foreign-currency deposit ceiling to B1 from Ba3 on 15
January 2015. Moody's foreign-currency ceilings determine the highest
rating possible in a given country for debt instruments denominated in
foreign currency issued by domestic borrowers other than the national
government.
WHAT COULD MOVE THE RATINGS UP/DOWN
The negative rating outlooks imply that upward pressure on the
long-term debt and deposit ratings of Ardshinbank and VTB Bank
(Armenia) is unlikely in the next 12 months.
Moody's might downgrade the ratings of Ardshinbank and VTB Bank
(Armenia) further if Moody's observes any evidence of erosion of the
risk-absorption capacity and financial fundamentals of the affected
entities. This could stem, for example, from increasing challenges
within the domestic operating environment. Conversely, improvements in
Armenia's economic growth prospects could stabilise the ratings of
these two banks at the current levels.
The principal methodology used in these ratings was Global Banks
published in July 2014. Please see the Credit Policy page on
www.moodys.com for a copy of this methodology.
REGULATORY DISCLOSURES
For ratings issued on a program, series or category/class of debt,
this announcement provides certain regulatory disclosures in relation
to each rating of a subsequently issued bond or note of the same
series or category/class of debt or pursuant to a program for which
the ratings are derived exclusively from existing ratings in
accordance with Moody's rating practices. For ratings issued on a
support provider, this announcement provides certain regulatory
disclosures in relation to the rating action on the support provider
and in relation to each particular rating action for securities that
derive their credit ratings from the support provider's credit rating.
For provisional ratings, this announcement provides certain regulatory
disclosures in relation to the provisional rating assigned, and in
relation to a definitive rating that may be assigned subsequent to the
final issuance of the debt, in each case where the transaction
structure and terms have not changed prior to the assignment of the
definitive rating in a manner that would have affected the rating. For
further information please see the ratings tab on the issuer/entity
page for the respective issuer on www.moodys.com.
For any affected securities or rated entities receiving direct credit
support from the primary entity(ies) of this rating action, and whose
ratings may change as a result of this rating action, the associated
regulatory disclosures will be those of the guarantor entity.
Exceptions to this approach exist for the following disclosures, if
applicable to jurisdiction: Ancillary Services, Disclosure to rated
entity, Disclosure from rated entity.
Regulatory disclosures contained in this press release apply to the
credit rating and, if applicable, the related rating outlook or rating
review.
Please see www.moodys.com for any updates on changes to the lead
rating analyst and to the Moody's legal entity that has issued the
rating.
Please see the ratings tab on the issuer/entity page on www.moodys.com
for additional regulatory disclosures for each credit rating.
Elena Redko
Asst Vice President - Analyst
Financial Institutions Group
Moody's Investors Service Limited, Russian Branch
7th floor, Four Winds Plaza
21 1st Tverskaya-Yamskaya St.
Moscow 125047
Russia
Telephone: +7 495 228 6060
Facsimile: +7 495 228 6091
Yves J Lemay
MD - Banking
Financial Institutions Group
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454
Releasing Office:
Moody's Investors Service Ltd.
One Canada Square
Canary Wharf
London E14 5FA
United Kingdom
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454
https://www.moodys.com/research/Moodys-downgrades-two-Armenian-banks-ratings-outlooks-changed-to-negative--PR_316374
From: A. Papazian