Fitch Affirms Belgazprombank Rating Second Time in 2009
OREANDA-NEWS. November 19, 2009. Amid the ongoing financial crisis Fitch Ratings has affirmed Belgazprombank's (BGB) Long-term foreign currency Issuer Default Rating (IDR) – a second time in 2009, reported the press-centre of Belgazprombank.
The affirmation of BGB's IDRs and Support Rating reflect Fitch's view on the likelihood of support from the bank's controlling shareholders, OAO Gazprom (Gazprom, rated 'BBB'/Negative) and the affiliated JSB Gazprombank. Fitch believes that Gazprom's ability and propensity to provide support to BGB, in case of need, are strong. However, Belarusian transfer and convertibility risks may limit the extent to which BGB could utilise such support, and therefore impose constraints on BGB's IDRs and Support Rating.
The rating was confirmed at 'B' with a Negative Outlook. The agency has simultaneously affirmed BGB's Short-term foreign currency IDR at ‘B’, Individual Rating at ‘D/E’, and Support Rating at ‘4’. The Negative Outlook reflects the agency’s concern that Belarus's deteriorating macroeconomic environment could weaken the sovereign's credit profile and lead to a potential increase in transfer and convertibility risks.
BGB's Individual Rating takes into account its relatively limited franchise, significant share of wholesale funding and a high share of foreign currency lending, as well as the challenging Belarusian operating environment. However, BGB's Individual Rating also reflects the bank's strong track record in SME lending, its special role in Gazprom's settlement system, its significant loss absorption capacity, and satisfactory liquidity.
Reference information
BGB’s loan portfolio grew 22% in 9M09 mostly as a result of the devaluation of the Belarusian rouble (BYR) reflecting a high share of foreign currency lending (63% of gross loans at end-Q309). Non-performing loans, defined as loans overdue more than 90 days, accounted for a low 1% of gross loans at end-Q309, but are likely to increase as a result of the deteriorating operating environment and the seasoning of the loan book. However, BGB’s loss absorption capacity was strengthened by a USD75m additional capital injection in October 2009. Fitch estimated that at end-October 2009 BGB could have increased its regulatory loan impairment reserves to a significant 28% of gross loans from the current (preliminary) level of 1.5% without breaching its regulatory capital adequacy ratios.
Funding from other banks and financial institutions was reduced to 29% of liabilities at end-Q309 (40% at end-2008), of which a significant share was due to Gazprombank (35%). BGB’s liquidity position is comfortable with liquid assets, defined as cash and equivalents, and interbank placements up to 30 days and available for repo securities, covering 22% of liabilities as of end-October 2009 and no significant repayments of third party foreign obligations are due in the following 12 months.
BGB is the seventh-largest bank in Belarus. It focuses on lending to SME and the retail sector. The bank is 49.02% owned by Gazprom and 49.02% by Gazprombank.
In Fitch's rating criteria, a bank's standalone risk is reflected in Fitch's Individual ratings and the prospect of external support is reflected in Fitch's Support ratings. Collectively these ratings drive Fitch's Long- and Short-term IDRs.
Комментарии