Baku, Azerbaijan, May 7
By Ali Mustafayev – Trend:
Kazakhstan based Bank of Astana has faced substantial liquidity pressure, driven by a severe loss of confidence among the bank's clients, S&P Global Ratings said in a message.
“This loss of confidence may have been triggered by the President of Kazakhstan's public expression of concerns with regard to three small Kazakh banks, including Bank of Astana, during a meeting with National Bank of Kazakhstan (NBK),” the message said.
S&P Global Ratings today lowered its long- and short-term issuer credit ratings on Bank of Astana to 'D/D' from 'CCC/C'.
The downgrade follows the official announcements by the Bank of Astana, made on May 2 and April 28, 2018, which impose extensive temporary restrictions on cash operations and debit operations on due dates, for both corporate and retail clients.
“We understand that, because of a low liquidity cushion, the bank is unable to process most of its payments in full and on time, or to pay back the majority of corporate clients who have requested payment,” the agency said.
Bank of Astana had 60 billion tenge ($181 million) in cash and equivalents as of April 1, 2018.
“We understand that the bank has been able to satisfy about 30 billion tenge of client outflows, or around 10 percent of all customer deposits, over the past two weeks”.
The bank has also managed to reduce its loan book by facilitating repayment of 17 billion tenge of loans. However, it has now imposed withdrawal restrictions because liquid assets are not sufficient to service all its obligations in full and on time.
In the absence of liquidity support from the National Bank of Kazakhstan or from other parties, the obligor will fail to pay all or substantially all of its obligations as they come due, according to S&P.
The agency also said that it will raise the ratings on Bank of Astana from 'D' once the bank is in a position to timely and fully service its financial obligations.
Further rating actions may follow once the bank has restored its liquidity position the agency has information on potential government or shareholder support.
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