OREANDA-NEWS. On September 22, 2008 Moody's Investors Service assigned the following global-scale ratings to Joint-Stock Commercial Alokabank (Alokabank): a bank financial strength rating ("BFSR") of E+, long-term and short-term local currency deposit ratings of B1/Not Prime and long-term and short-term foreign currency deposit ratings of B3/Not Prime. All ratings carry a stable outlook.

According to Moody's, Alokabank's ratings reflect the bank's established business relations and expertise in servicing the telecommunication sector of the Republic of Uzbekistan, its adequate capitalisation, strong financial performance and good asset quality to date.

At the same time, Alokabank's ratings are constrained by the bank's corporate governance and risk management practices which still have room for development and should be tested further in a more competitive business environment. Other constraining factors include the high volume of related-party business and the significant level of single-name concentrations on both sides of the balance sheet.

Alokabank's deposit ratings are underpinned by Moody's expectation of a high probability of systemic support to the bank, in case of need. This expectation stems from the special mandate given to Alokabank by the Uzbek government as regards rendering financial services to the state telecommunication industry, as well as the government's direct ownership of a 51.93% share in the bank and indirect control of an even larger stake of up to 68% of shares.

As a result, in accordance with Moody's JDA methodology for banks Alokabank's deposit rating of B1 benefits from a two-notches uplift from its own B3 baseline credit assessment (mapped in turn from its E+ BFSR).

According to Moody's, an upgrade of Alokabank's BFSR of E+ might be possible if the bank slacken its dependence on a single state-owned industry segment (telecommunications), while, at the same time, decreasing the level of concentration on both sides of the balance sheet, preserving consistently good financial performance and asset quality indicators, and demonstrating adequate capitalisation levels. Conversely, a significant deterioration in the quality of the bank's loan portfolio and/or financial metrics would be likely to result in a downgrade of the bank's BFSR.

Moody's also notes that Alokabank's deposit ratings are strongly dependent upon the stance and conditions of Uzbekistan's operating and economic environment.

"Alokabank's B1 GLC deposit rating could be downgraded if Moody's current perception of the probability of systemic support to the bank from the government of Uzbekistan were to lower, although we do not expect this scenario to realise in the foreseeable future" says Olga Ulyanova, a Moody's Assistant Vice-President/Analyst.