Fitch affirms Uzbek Agrobank’s rating

Business Materials 17 October 2012 10:00 (UTC +04:00)

Uzbekistan, Tashkent, Oct.17/Trend, D.Azizov/

Fitch Ratings has affirmed OJSC Agrobank's Long-term foreign currency Issuer Default Rating (IDR) at 'B-' with a Stable Outlook and Viability Rating (VR) at 'f'. Fitch has also downgraded the bank's Long-term local currency IDR to 'B-' from 'B', the agency's report says on Tuesday.

The agency has removed the IDRs from Rating Watch Negative (RWN), where they were placed on 31 October 2011. A full list of rating actions is at the end of this commentary.

Agrobank's IDRs reflect Fitch's view of the probability that support would be forthcoming from the Uzbek authoriities if needed. This view takes into account the evidence of recent regulatory forbearance, the track record of equity injections, Agrobank's significant systemic importance as the fourth-largest bank by assets in the country, and its policy role as a lender to the agricultural sector.

"At the same time, the downgrade of the Long-term local currency IDR to 'B-' from 'B' reflects the fact that support made available to date by the state authorities, combined with a further planned equity injection, is unlikely, in Fitch's view, to be sufficient to fully restore the bank's solvency," the report says.

The affirmation of the VR at 'f' reflects Fitch's view that the bank has not yet regained its solvency following losses resulting from the alleged fraudulent activities of its former employees, discovered in 2011.

According to the agency, Agrobank received about UZS11bn of new capital from the state in 2011 and UZS41bn in H112.