Baku, Azerbaijan, Dec. 17
By Elena Kosolapova - Trend: Standard & Poor's Ratings Services raised its long- and short-term counterparty credit ratings on Kazakhstan-based Temirbank JSC to 'B/B' from 'B-/C', the rating agency reported on Dec. 17. The outlook is stable. At the same time, the agency raised its Kazakhstan national scale rating on Temirbank to 'kzBB' from 'kzBB-'.
"The upgrade reflects the announcement that Alliance Bank JSC's debt restructuring plan, which includes a merger with Temirbank and ForteBank JSC, was approved by the court on Dec. 12, 2014. This plan leads to a substantial reduction of Alliance Bank's indebtedness and restoration of its solvency," the agency said.
By Jan. 31, 2015, Alliance Bank's merger with Temirbank and ForteBank is expected to be complete. Temirbank will become a wholly-owned and fully integrated subsidiary of Alliance Bank.
S&P therefore will consider Temirbank as a "core" subsidiary of Alliance Bank. According to its Group Rating Methodology, "core" subsidiaries are rated at the level of the group credit profile, which the agency assesses at 'b'. As the agency assesses Temirbank's stand-alone credit profile at 'b-', the ratings benefit from one notch of uplift, as per the criteria.
The raising of the national scale rating to 'kzBB' from 'kzBB-' and the upgrade of the subordinated debt reflects solely those ratings' relationship to the long-term global scale rating.
The stable outlook on Temirbank reflects that on Alliance Bank, given Temirbank's "core" status.
"The stable outlook on Alliance Bank reflects our view that, following the restructuring and merger with Temirbank and ForteBank, the new bank will maintain a stable competitive position in Kazakhstan's banking sector, supported by its restored capitalization and profitability," the agency said.
S&P expects Temirbank to keep its "core" status within the Alliance Bank Group and that the ratings and outlook on Temirbank will therefore move in tandem with the group credit profile. After the court decision, the agency sees only a marginal risk that the combination of the three banks and the full integration of Temirbank and ForteBank into Alliance Bank will not go through. But if this risk materializes, S&P would reassess the view of the group support Temirbank receives.
Elena Kosolapova is Trend Agency's staff journalist, follow her on Twitter: @E_Kosolapova