OREANDA-NEWS. On October 09, 2007 Fitch Ratings today revised the Outlooks for the Long-term Issuer Default Ratings (IDRs) to Stable from Positive for four Kazakhstani banks: the Development Bank of Kazakhstan (DBK), Bank TuranAlem (BTA), Halyk Bank of Kazakhstan (Halyk) and Kazkommertsbank (KKB). The ratings are listed below, reported the press-centre of KASE.

The change in Outlooks for the four banks follow Fitch's action yesterday, which changed Outlooks for the Kazakhstani sovereign's 'BBB' Long-term foreign currency IDR and 'BBB+' Long-term local currency IDR to Stable from Positive.

DBK's ratings reflect Fitch's view of the very strong propensity of the Kazakhstani authorities to provide support to the bank in case of need, and hence, taking into account the authorities' ability to support, the high probability of such support being forthcoming. The IDRs of BTA, Halyk and KKB are underpinned by Fitch's view of the strong propensity of the Kazakhstan authorities to provide support to those banks in case of need, and hence, taking into account ability to support, the moderate probability of such support being forthcoming.

At the same time, Fitch reiterates its view on the stand-alone strength of Kazakhstani banks, as outlined in its report of 17 August 2007, entitled "Kazakhstani Bank Refinancing Risk Moderate in Near-Term". In Fitch's view, refinancing risks for Kazakhstani banks as a result of currently limited access to foreign funding are moderate. However, banks face heightened risks in the current market environment, in particular due to:

- a tightening of liquidity in the corporate sector as banks restrict issuance of new loans, especially to the more highly-leveraged construction and  real estate development sectors, which are major borrowers from banks;

- downward pressure on real estate prices as a result of the tighter credit environment, which could impact both the performance of the construction/real estate sector itself and the sufficiency of collateral held by banks on existing corporate and retail loans;

- downward pressure on the KZT/USD exchange rate due to capital outflows replacing the strong capital inflows of the last few years, which could impact the ability of unhedged Kazakhstani borrowers to meet their obligations under foreign currency loans from the banking sector,  although in mitigation Fitch notes that the authorities have so far been prepared to deploy official reserves to stem this downwards pressure.

These heightened risks compound the already high credit risks in the banking sector resulting from the very rapid loan expansion of recent years and the still considerable individual borrower concentrations in banks' loan books.

Fitch again notes that, should these risks start to feed through into particular banks and/or general market concerns leading to confidence issues, then the Individual ratings of those banks would be likely to come under downward pressure. At the same time, Fitch also notes that the Long-term IDRs of the country's six largest commercial banks - KKB, BTA, Halyk, Alliance Bank ('BB-' (BB minus)), ATF Bank ('BB-' (BB minus)) and Bank CenterCredit ('BB-' (BBminus)) - are underpinned by the possibility of sovereign support. Thus, they would be downgraded only if the Kazakhstani sovereign itself was downgraded or if Fitch revised its view of the propensity of the authorities to provide support to these banks.

Fitch's view on current refinancing, liquidity and credit risks for Kazakhstani and Russian banks is also reflected in a recent report, entitled "Russian and Kazakhstani Banks A Whole New Ball Game?", available on the agency's subscription website, www.fitchresearch.com.

Rating actions:

- DBK:

  - Long-term foreign currency IDR: affirmed at 'BBB' Outlook changed to Stable from Positive

  - Long-term local currency IDR: affirmed at 'BBB+': Outlook changed to Stable from Positive

  - Short-term foreign currency IDR: affirmed at 'F3'

  - Short-term local currency IDR: affirmed at 'F2'

  - Support rating: affirmed at ?'

  - Support Rating Floor: affirmed at 'BBB'

- BTA, Halyk, KKB (ratings apply to all three banks):

  - Long-term foreign currency IDR: affirmed at 'BB+' Outlook revised to Stable from Positive

  - Long-term local currency IDR: affirmed at 'BBB-' (BBB minus)

  - Short-term foreign currency IDR: affirmed at 'B'

  - Short-term local currency IDR: affirmed at 'F3'

  - Individual rating: affirmed at 'C/D'

  - Support rating: affirmed at ?'

  - Support Rating Floor: affirmed at 'BB+'