Fitch Ratings retained IBA ratings at previous level
The International Fitch Ratings Rating Agency confirmed the rating of the International Bank of Azerbaijan (IBA) at the level of 2004, namely, a long-term rating is at the BB level, a short - term rating at "B", an individual rating - "D/E" and the support rating - "5". The forecast for the long-term rating remained as Stable.
The NBA board chairman Asker Mamadov, commenting on the decision of the agency to Trend found this fact not surprising, as the countrys rating remained at the same level, therefore, it would have been naГЇve to count on the IBA rating renewal.
В"The banks rating cannot be higher of the sovereign one, although one would like the country and the bank ratings to be renewed judging by the economic processes in Azerbaijan and progress in the IBA development, Mammadov said.
The projected phased privatization of the banks shares in the amount of 50,2%, which is currently owned by the Finance Ministry of Azerbaijan is a strategic task of the government, however, its implementation may be complicated in the nearest time. Besides, the progress in the privatization, at least, at the initial stage, will hardly affect seriously probable support to NBA from the state, then, the banks rating due to its dominating position in the market.
The banks individual rating takes into account a relatively small size of the bank according to international standards, high levels of the credit portfolio concentration and the funding base, which also causes concern in regard to the corporative management. Mammadov thinks, the corporative management standards improve constantly, therefore, no wonder, its level at NBA does not suit foreign experts.
NBA is willing to retain leading position in all banking segments in the middle-term perspective. By the state for late October 2005 NBA took 46% of the countrys lending segment, 78% of the corporative clients deposit segment and 32% of physical entities deposits. To compare, none of the banks in Azerbaijan takes over 8 % in any of these segments.
The agency reports also, at the end of the first half year of 2005 the IBA total capitalization index under the Basel agreement recommendations was at the low level of 8,5 %, and the capital index under the local standards was lower of the minimal 21% level, starting with November 2004 and till now.
The IBA deputy chairman said, the decision on the bank capitalization has been taken last year. This process started in December 2005 and the Finance Ministry from the total amount of 52,1 billion AZM of the state share has repaid already 24,1 billion AZM. The remaining amount of 28 billion AZM will be paid during the first quarter of 2006. The rest part (47,9 billion AZM from the total volume of emission of 100 billion AZM) will be placed through the Baku Stock Exchange among the stock-holders (physical and legal entities).