Fitch Ratings, today upgraded International Bank of Azerbaijan ("IBA") Issuer Default rating ("IDR") to 'BB' from 'BB-' (BB minus) and Kapital Bank's IDR to 'BB-' (BB minus) from 'B+' and Support rating to '3' from '4'. IBA Support rating is affirmed at '3', Trend reports with reference to the statement of Fitch Ratings. The other ratings of both banks are affirmed at Short-term 'B' and Individual 'D/E'. The Outlooks on both banks' IDR remain Stable.
The upgrade reflects the improved ability of the Azerbaijan authorities to support the two banks in case of need as indicated in recent sovereign IDR upgrade to 'BB+' (see announcement on 5 February 2007 on www.fitchratings.com ). Fitch's view on the Azerbaijan authorities' propensity to provide such support remains unchanged. In the case of IBA, this view is underpinned by the bank systemic role to the Azerbaijan banking sector and economy and majority state ownership. In the case of Kapital Bank, the propensity to support is backed by the bank important role in serving state needs (namely, distribution of budget, pensions and certain social payments) through its national network and 100% state ownership. Any further movement in the IDR, Short-term and Support ratings of these banks may result from an upgrade/downgrade of the sovereign rating - although the latter is not expected at present, given the Stable Outlook on Azerbaijan IDR - or if Fitch's view on the state propensity to support the banks materially changes.