OREANDA-NEWS. September 02, 2011. One of the main factors ensuring stability of the economic system of any country is stability of the credit and banking system. According to experts, the progressively developing national banking sector managed to become one of leaders in the region and ensure stability and dynamic development of the economy.  

The banking system is a key part of any economy. Its perfection influences not only economic development but also the state position on the international arena, the wellbeing of citizens. Banks are among the most regulated organizations and institutions. This is largely due to the role of credit institutions as the blood vessels of the economy both for individual countries and global business.

Dynamic development of the national banking system is an integral part of the country's economy as a whole. Lending, non-cash payments and transfers are becoming more common services. More and more companies finance their own development at the expense of borrowed funds, thus the total assets of the banking system of the republic in recent years have increased by 2-3 times. More and more banks realize the importance and urgency of getting the rating: one of the most important conditions for improving the bank’s image, strengthening its position in the banking system and increasing credibility with customers and authorities.

In addition, great significance is given to coordination of credit institutions’ activities on the international scale. Efforts of the Basel Committee and its offices are directed for these purposes. Ultimately, international and domestic rating agencies pursue the same goals, which provide the business community their assessment of businesses, including banks, in the form of ratings, regardless of their nationality. Bank rating is an assessment of its ability to timely and fully meet its obligations (to pay deposits, accrued interest, lend the planned volumes and so forth), while operating profitably. Main principle of rating is an independent, or objective, reflection of the bank along other market participants with particularly prepared financial, statistical and other information that turns into a group of indicators.

In the inflow of foreign investments in the domestic banking system and growing competition, banks need to increase attractiveness for customers. Today, the most developed segment of the rating of products in Uzbekistan is the bank ratings. This is explained not only with a greater regulation of activity, but also relative accessibility and transparency of the credit reporting agencies, acute public interest generated by the growing diversity of banking products and services.

The modern banking system of Uzbekistan is one of the youngest. In fact, it is only 20 years old. In accordance with the resolution of the President of Uzbekistan “On priorities for further reforming and improving the stability of the financial and banking system of the republic in 2011-2015 and achieving high international rating indicators” the task to further reform the banking system and achieve the highest international rating of banks, increase financial sustainability and implementation of international standards of assessment and evaluation of banking to Uzbekistan's practice were defined. To this period the competition between banks acquired real shape, and the business needed clear guidance in choosing banks.

Currently, the three leading rating agencies analyze the banking sector of Uzbekistan, whose ratings are recognized by international financial institutions, namely, Standard & Poor's, Moody’s and Fitch Ratings.

 In order to introduce a modern system of assessment and analysis of commercial banks and the financial system based on international standards and criteria used by leading international rating agencies, in April and May of 2011 the Central Bank of Uzbekistan jointly with the International rating agencies Standard & Poor's, Moody’s and Fitch Ratings organized workshops and meetings which were attended by experts and analysts of these agencies. In particular, the experts gave an explanation of the methodology of their own credit rating, and shared views on the ongoing reforms in the banking sector of Uzbekistan.

It should be especially noted that in August, 2011 the international rating agency Moody's has confirmed the forecast of Uzbekistan banking system development as stable. This forecast reflects expectations of Moody's that the country will remain favorable macroeconomic conditions, which will continue to have a positive impact on the banking system, ensuring the inflow of deposits and the increase in demand for loans from borrowers.

'Stable' outlook for the country's banking system is related to stable forecast of independent financial sustainability ratings of bond and deposits of Uzbek banks. Today, 18 commercial banks, including 3 private banks of the country are considered stably developing by leading international rating agency Fitch Ratings, Moody's and Standard & Poor's. It should be noted that the assets of these banks account for more than 90% of the assets of the banking sector of the country. In addition, the foreign experts underscored that the stability of the financial and banking system of the republic amid the global financial crisis is a clear evidence of reasonableness of the reforms undertaken by the government and the Central Bank.

The banks’ positive outlook creates conditions for domestic banks’ to go in the international market, and also increases the confidence of investors. Rating score is an important signal to potential investors. Today, national banks represent a complete system that actively reinforcing and fuel economic potential of Uzbekistan. Multilateral banking activities facilitate introduction of modern market relations and business development in all spheres of national economies.