Baku, Azerbaijan, Dec. 19
By Azad Hasanli – Trend:
The business model of Bank of Baku and several other banks, focused on high-risk, unsecured consumer lending, is not sustainable in the current environment as the debt servicing capacity of households remains weak, Moody's Investors Service international rating agency said in a message.
Moody's has downgraded OJSC Bank of Baku’s long-term foreign- and local-currency deposit ratings to Caa3 from Caa1. The bank's baseline credit assessment (BCA) and adjusted baseline credit assessments were downgraded to caa3 from caa1. The outlook on the long-term local- and foreign-currency deposit ratings remain negative.
“Over the first eleven months of 2017 the bank recognized a net loss of 35.2 million manats,” the message said. “This caused regulatory capital falling to 24.8 million manats as of December 1, 2017, which is below the minimal regulatory threshold of 50 million manats.”
Despite the shareholders' decision to increase the bank's equity by 91 million manats, taken at the general meeting in June 2017, no capital has been injected to date by the shareholders. The rating agency is not aware of the shareholders' definitive plans and the timing of any support for the Bank of Baku, or plans to merge it with other local banks.