OREANDA-NEWS. Fitch Ratings has today downgraded Ukraine-based Bank Khreschatyk's ("Khreschatyk") foreign currency and local currency Issuer Default ratings ("IDRs") to "B-" (B minus) from "B" and Support rating to "5" from "4", thus resolving the Rating Watch Negative placed on the ratings on 12 December. A Stable Outlook is assigned.

The bank's other ratings are affirmed at Short-term "B" and Individual "D/E". The Long-term rating of Khreschatyk's UAH100 million bond issue, due May 2010, is also downgraded to "B-" (B minus) from "B", while the "RR4" Recovery Rating on the bond is affirmed.

The downgrade reflects the city of Kiev's ("the city") stake reduction in Khreschatyk to 23,7% from 51,2%, following a new UAH290m share issue, which was approved at a shareholders' meeting on 18 December 2006.

Although the city had subscribed for an amount of shares in the offering that would have enabled it to maintain its 51,2% stake, it was unable to gather the funds required to pay for the subscribed shares and therefore did not participate in the issue.