Fitch upgrades four Uzbek state-owned banks
Baku, Azerbaijan, January 17
Fitch Ratings has upgraded the Long-Term Issuer Default Ratings (IDRs) of four Uzbek state-owned banks to ‘B+’ from ‘BB-’, Trend reports via UzDaily.uz.
The affected banks are Uzbek Industrial and Construction Bank Joint-Stock Commercial Bank (UPSB), Joint Stock Commercial Bank Asaka (Asaka), OJSC Agrobank (Agro) and Microcreditbank (MCB).
The Outlooks are Stable.
The four banks’ IDRs, Support Ratings and Support Rating Floors (SRFs) were upgraded after Fitch assigned Long-Term Foreign- and Local-Currency IDRs to Uzbekistan at ‘BB-’ with a Stable Outlook.
Equalisation of the four banks’ ratings with that of the sovereign reflects Fitch’s view of a high propensity of the Uzbek authorities to provide support to these banks in case of need, due to: majority state ownership in the capital of banks; high systemic importance (UPSB, Asaka) and important policy roles (to a lesser extent at MCB); high flexibility of the state to provide support, as reflected by substantial international reserves of $26 billion at end of 3 quarter 2018; state guarantees on banks’ largest exposures (UPSB and Asaka); and a large share of government-related funding; positive track record of capital and liquidity support provided to state-owned banks.
The banks’ support-driven IDRs are sensitive to changes in sovereign’s ratings. In addition, signs of weaker propensity of the Uzbek authorities to provide extraordinary support to the state-owned banks could result in a downgrade of the banks’ Support Ratings and SRFs and, consequently, their IDRs.