 |
December 19, 2007 |
|
|
|
 |
BANK TURANALEM: S&P Changes BB Rating's Outlook to Negative Standard & Poor's Ratings Services had revised its outlook to negative from stable on Bank TuranAlem. The rating actions reflect Standard & Poor's concerns over the increasing pressure on asset quality and liquidity that Kazakh banks are subject to as the current market turmoil stretches on, despite their having overcome the immediate impact of the global liquidity squeeze through adequate asset-liability management. The banking sector is likely to undergo a transformation of its industry profile, business models, and practices, which also adds uncertainty about individual banks' ability to adjust to the new situation Rapid growth of banks in the high-risk economic and banking environment of the Republic of Kazakhstan (foreign currency BBB- /Stable/A-3, local currency BBB/Stable/A-3) funded by ever- increasing international indebtedness has been a long-standing concern of Standard & Poor's. The global liquidity squeeze that began in August only served to heighten these worries. Banks particularly at risk of a downgrade are those with large refinancing needs for international syndicated debt; those most exposed to the vulnerable real estate, construction, and other problematic sectors; and smaller banks that the government is not likely to support. A sharp slowdown in lending growth should reveal the true extent of asset quality problems. High growth in recent years has hidden problem loans, as most credits were unseasoned and loans, even problematic ones, could easily be refinanced in a buoyant environment. A potential for further devaluation of the tenge, as seen in the past few months, also threatens borrower debt service ability, with foreign currency loans representing 43% of total system loans at Oct. 31, 2007. Government liquidity support, continued financial inflows related to the favorable prices on natural resources (namely oil and gas), and household consumption that is expanding at a healthy rate in Kazakhstan only partly mitigate these concerns. In the next couple of months Standard & Poor's will publish a new Bank Industry Risk Analysis report on Kazakhstan presenting a detailed analysis of the country's banking system. Ratings List To From Bank TuranAlem Counterparty credit rating BB/Negative/B BB/Stable/B NB: This list does not include all ratings affected. |
|
|
||
|
Today's Top Stories have been selected from the Troubled Company Reporter - Europe. To receive the Full TCR-EUR please CLICK HERE.
