Azerbaijan, Baku, May 17 / Trend /
Fitch Ratings has affirmed Azerbaijan-based Bank Technique's Long-term Issuer Default Rating (IDR) at 'CC'. At the same time the agency has upgraded BT's Viability Rating (VR) to 'cc' from 'f', Fitch Ratings said today.
According to the report, the upgrade of BT's VR reflects some limited improvements in its credit profile during the year, including the bank's somewhat more comfortable liquidity position and the expected compliance with regulatory capital requirements following the recent equity injection.
The bank's private shareholders recently provided AZN9m of fresh equity and plan to inject a further AZN5m by end-May 2013. Fitch estimates that if the provisioning level remains unchanged these capital injections will allow BT to become compliant with regulatory capital adequacy ratio (CAR) at end-May 2013.
At the same time, Fitch acknowledges that BT's liquidity position has improved compared to 2012. BT maintained a cash cushion of AZN79m (equal to 19% liabilities) at end-2012. This compares to potential wholesale repayments in 2013 of AZN5m due to foreign institutions and AZN30m of funding from local banks and government-related institutions.
The latter are likely to extend their facilities, in Fitch's view, reducing potential liquidity/refinancing pressure.
BT's IDRs and VR could be upgraded if the bank makes considerable further progress with work outs of impaired loans or if significant additional capital injections are forthcoming from BT's private shareholders.
BT's ratings could be downgraded if a renewed deposit run renders the bank unable to service its obligations or if the regulator takes actions to place the bank into administration; however, neither scenario appears likely in the short term.
Bank Technique was created in 1994 named as "Rasadbank". It was renamed into "Texnika Bank" in 1998. Following the successful re-branding in 2012, the bank entered the market of banking services as "Bank Technique", by creating the image of an innovative bank.
The official exchange rate is 0,7847 AZN/USD on May 17.