Azerbaijan, Baku, March 22 / Trend E. Kosolapova/
Fitch Ratings has downgraded Kazakh ATF Bank JSC's Long-term Issuer Default Ratings (IDRs) to 'BBB-' from 'BBB' and placed the ratings on Rating Watch Negative (RWN).
Short-term foreign currency IDR: 'F3' placed on RWN
National Long-term Rating: downgraded to 'AA(kaz)' from 'AA+(kaz)', placed on RWN
Viability Rating: 'b-', unaffected
Support Rating: '2' placed on RWN
Senior unsecured debt downgraded to 'BBB-' from 'BBB', placed on RWN
National senior unsecured debt rating downgraded to 'AA(kaz)' from 'AA+(kaz)', placed on RWN
Subordinated debt downgraded to 'BB+' from 'BBB-', placed on RWN
National subordinated debt downgraded to 'AA-(kaz)' from 'AA(kaz)', placed on RWN
Perpetual subordinated notes downgraded to 'B+' from 'BB-', placed on RWN
"The downgrade is driven by the downgrade of ATF's ultimate parent bank Unicredit S.p.A. to 'BBB+'/Negative," Fitch said.
The RWN follows Unicredit's announcement on 15 March 2013 that it has signed an agreement for the disposal of its 99.75 percent share in ATF, and reclassified the bank as an asset held for sale. The prospective buyer, KazNitrogenGaz LLP (not rated), is a Kazakh-domiciled holding company, fully owned by local businessman Galimzhan Esenov, and also holds majority stakes in two small Kazakh insurance companies. Unicredit expects the sale to be completed by end-April 2013 subject to approval by the National Bank of Kazakhstan.
Fitch will resolve the RWN on the Long-term IDRs following (i) completion of the sale, and (ii) a review of ATF's standalone profile, which drives its Viability Rating (VR) of 'b-'. Following the resolution of the RWN, Fitch expects that ATF's Long-term IDR will probably be aligned with its VR, given the more limited reliability of support from the new shareholder and significant uncertainty concerning the readiness of the Kazakh authorities to provide support, even to systemically important domestic banks.
"ATF's VR reflects the bank's weak asset quality, moderate capitalisation, modest pre-impairment profitability (before expenses and recoveries related to credit protection of the loan book provided by Unicredit) and negative net income for the past four years. However, the VR also considers the bank's currently satisfactory liquidity position, the moderate improvement in capitalisation following the equity injection by Unicredit in Q312 and the generally supportive operating environment, which should help efforts to stabilise and improve asset quality," Fitch said.