OREANDA-NEWS. Fitch Ratings  on 10 July 2008 downgraded Azerbaijan-based Kapital Bank’s ratings to Long-term Issuer Default (IDR) and Support Rating Floor ‘B+’ from ‘BB-’ (BB minus) and to Support ‘4’ from ‘3’. These ratings are removed from Rating Watch Negative (RWN) where they were placed on 8 November 2007. A Stable Outlook is assigned to the Long-term IDR. Fitch has also affirmed Kapital’s other ratings at Short-term IDR ‘B’ and Individual ‘D/E’.

The rating action follows the recent announcement of the completion of the final stage of privatisation, after which the Azeri authorities’ stake in the bank is reduced to zero.

Although privatisation has eliminated state ownership and thus, in Fitch’s view, reduced the government’s propensity to support the bank, the agency believes Kapital will continue to be systemically important. The limited probability of support – as reflected in the ‘B+‘ Support Floor - is driven by the socially important functions performed by the bank, namely, making pension and other social payments (recipients therefore often also have accounts with the bank), and its important role in servicing state entities and regional treasury accounts countrywide. Those functions are underpinned by the bank’s, thus far, unmatched network in the country, especially in regions, comprising 90 branches/sub-branches, some 100 other outlets and 200 ATMs.