S&P affirmed ratings of Kazakh ForteBank

Business Materials 17 December 2014 16:57 (UTC +04:00)
Standard & Poor's Ratings Services affirmed its 'B/B' long- and short-term counterparty credit ratings on Kazakhstan-based ForteBank JSC
S&P affirmed ratings of Kazakh ForteBank

Baku, Azerbaijan, Dec. 17

By Elena Kosolapova - Trend: Standard & Poor's Ratings Services affirmed its 'B/B' long- and short-term counterparty credit ratings on Kazakhstan-based ForteBank JSC, the rating agency reported on Dec. 17.

The outlook is stable. At the same time, S&P lowered its Kazakhstan national scale rating on ForteBank to 'kzBB' from 'kzBB+'.

"The affirmation reflects the announcement that Alliance Bank's debt restructuring plan, which includes a merger with Temirbank JSC 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. ForteBank will become a wholly-owned and fully integrated subsidiary of Alliance Bank.

S&P therefore considers ForteBank as a "core" subsidiary of Alliance Bank. According to the Group Rating Methodology, "core" subsidiaries are rated at the level of the group credit profile, which the agency assesses at 'b'. As S&P also assesses ForteBank's stand-alone credit profile (SACP) at 'b', the agency does not factor any notches of uplift into the rating on the bank because typically does not rate a subsidiary above the group credit profile.

S&P expects the integration of the three banks to take place in 2015-2016, resulting in a common information technology platform, risk management systems, and policies.

The lowering of the national scale rating to 'kzBB' from 'kzBB+' reflects ForteBank's incorporation in a group with a weaker financial profile, although its SACP is higher than those of Alliance Bank and Temirbank.

The stable outlook on ForteBank reflects that on Alliance Bank, given ForteBank's "core" status.

"The stable outlook on Alliance Bank reflects the 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," S&P said.

The agency expects ForteBank to keep its "core" status within the Alliance Bank Group and that the ratings and outlook on ForteBank will therefore move in tandem with the group credit profile. After the court decision, S&P 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, the agency would reassesses its view of the group support ForteBank receives.

Elena Kosolapova is Trend Agency's staff journalist, follow her on Twitter: @E_Kosolapova