IBA’s Moscow branch sells its toxic assets
Baku, Azerbaijan, Oct. 18
By Azad Hasanli – Trend:
Aqrarkredit CJSC non-banking company has bought out toxic assets of subsidiary of the International Bank of Azerbaijan (IBA) in Russia, IBA-Moscow, worth $417.8 million [about 26.3 billion roubles], according to the report by Moody's Investors Service.
The service has upgraded IBA-Moscow's (IBAM) long-term local- and foreign-currency deposit ratings to B2 from B3.
The current rating action primarily reflects Moody's revision of the bank's affiliate support from its immediate parent, International Bank of Azerbaijan (IBA), which together with IBAM received financial support from Azerbaijan’s state company Aqrarkredit, the report noted.
In the second and third quarters of 2016, a material share of IBAM's problem and long-term investment loans was repurchased via IBA by Aqrarkredit, according to the report.
As a result, IBAM's gross loan portfolio contracted by three times over the first eight months of 2016 and decreased to 13.8 billion roubles [$219.3 million] as of September 1, 2016, said the report.
Along with the toxic asset repurchase, IBAM's credit profile has been bolstered by a Tier 1 capital equity injection in the second half of 2016 from the parent bank that amounted to 2 billion roubles [$31.8 million], the report reads.
“This contribution was the largest in the last five years and increased Tier 1 capital by 70 percent,” the report said. “As a result, as of September 1, 2016, IBAM reported a Basel III statutory total capital adequacy ratio and Tier 1 ratio of 22.4 percent and 8.3 percent, respectively, well above the CBR [Central Bank of Russia] thresholds.”
Moody's expects additional capital injection and IBAM’s toxic asset repurchase by the parent bank in the next 12-18 months, according to the report.
IBA-Moscow was founded in 2002.