Kazakh Kazkommertsbank, Halyk Bank merger to be completed in 2H18 - S&P
Baku, Azerbaijan, March 23
By Fikret Dolukhanov – Trend:
S&P Global Ratings kept their 'B+' long-term global scale issuer credit rating and 'kzBBB-' long-term Kazakhstan national scale rating on Kazkommertsbank (KKB) on CreditWatch with positive implications, where it was placed on Dec. 22, 2017, the press office of the international rating agency reported.
At the same time, the rating agency affirmed the 'B' short-term issuer credit rating and removed it from CreditWatch positive, where it was placed on Dec. 22, 2017, by mistake. The mistake, however, did not affect the ratings on KKB.
According to the report, the CreditWatch continues to reflect the still-pending approvals of the merger from the shareholders of KKB and Halyk Bank and the banking regulators of Kazakhstan and Russia, where KKB has a subsidiary. The banks expect to receive shareholder approval for the merger around the end of April 2018.
S&P noted that they understand from KKB that preparations for the merger are proceeding according to the planned timeline, with the merger expected to be completed in the second half of 2018.
The rating agency has identified and corrected an error in its previous review when it placed its 'B' short-term issuer credit rating on KKB on CreditWatch positive. Raising the short-term rating would have required the rating agency to raise the long-term rating on KKB above 'BB+', a scenario S&P see as highly unlikely in the short term. The agency noted that, in their previous review, they should not have placed the short-term rating on KKB on CreditWatch positive. However, this error has had no impact on the ratings.
The S&P intend to resolve the CreditWatch on KKB upon completion of the merger, which they understand is likely to occur in the second half of 2018. At that point, the agency would likely equalize its ratings on KKB with those on Halyk Bank and then withdraw them, since KKB will cease to exist as a separate legal entity.
If the merger does not occur, the S&P would likely affirm their ratings on KKB. This could happen if the shareholders of either bank or their regulators do not approve the merger.