Baku, Azerbaijan, March 10
By Azad Hasanli, Anvar Mammadov - Trend:
The Azerbaijani Ministry of Finance's stake in the country's international bank will increase to above 80 percent, from 51.1 percent at present in the result of the planned 500 million manats' equity injection, according to the message of the international ratings agency Fitch Ratings published on its website March 10.
Fitch Ratings has affirmed International Bank of Azerbaijan's (IBA) Long-term Issuer Default Rating (IDR) at 'BB'.
The affirmation of IBA's Long-term IDR at 'BB' shows a stronger propensity of the authorities to support the bank, which is reflected in the 3 billion manats' clean-up of IBA's balance-sheet, executed through buy-outs of impaired loans, and a planned 500 million manats' equity injection, which will support IBA's solvency, according to the message.
The agency also affirmed short-term foreign currency IDR of the bank at 'B', viability rating at 'b-', support rating at '3', support rating floor at 'BB'.
The affirmation of these ratings continues to reflect Fitch's view of a moderate probability of support from the Azerbaijani authorities. The bank has high systemic importance, stemming from its dominant market shares and substantial funding from state-owned entities (around 1.5 billion manats or 15 percent at the end of the first half of 2015 liabilities), according to the agency.
The IBA also has fairly small size relative to the sovereign's available resources (IBA's equity and assets equaled to less than 2 percent and 25 percent of GDP in late 2015, respectively), said the message.
Fitch believes that the equity injection should - and cash receipts from any further loan sale could - support the bank's liquidity position.