Moody's placed on review ATF Bank ratings for downgrade
29.03.13 11:16
/Moody's Investors Service, London, March 27, 13/ – London, 27 March 2013 –
Moody's Investors Service has today placed on review for downgrade the
following ratings of ATF Bank: the B1 long-term local – and foreign-currency
deposit ratings, the B1 senior unsecured foreign-currency debt rating, the B3
junior subordinated foreign-currency debt rating, and the E+ standalone bank
financial strength rating (BFSR).
The review follows a joint announcement on 15 March 2013 – by ATF bank and
by UniCredit Group (UniCredit, the owner of a 99.75% stake in ATF Bank via its
subsidiary UniCredit Bank Austria AG) – regarding UniCredit's decision to
dispose of its Kazakh banking subsidiary, ATF Bank. The ultimate parent –
UniCredit Group is rated Baa2 deposits negative, BFSR C-/BCA baa2 negative.
RATINGS RATIONALE
In placing ATF Bank's deposit and debt ratings on review for downgrade, Moody's
noted that they currently benefit from a two-notch uplift from the bank's b3
baseline credit assessment (BCA), due to the rating agency's assessment of
a moderate probability of parental support from UniCredit. Moody's will
continue to incorporate a moderate probability of parental support to
ATF Bank's ratings because the rating agency expects UniCredit to maintain
its support towards ATF Bank until the proposed transaction is concluded.
However, Moody's is likely to remove the two notches of uplift if and when
UniCredit completes the transaction with KazNitrogenGaz LLP, which requires
regulatory approvals and is scheduled for completion in the second quarter
of 2013.
Moody's further explained that ATF Bank's fundamental credit quality –
reflected in its standalone BFSR and BCA, currently at E+/b3 – might be also
pressured by UniCredit's exit due to (1) ATF Bank's weak asset quality, which
may continue to deteriorate and put pressure on its capital; (2) the potential
negative impact on liquidity, given that 15% of the bank's liabilities
(as at H1 2012) were attracted from UniCredit, while close linkage with
UniCredit provided an additional leverage to attract deposits; and (3)
possible deterioration in profitability and operating efficiency as well
as in franchise value as a result of the negative impact of UniCredit's
exit on ATF Bank's average cost of funding and business volumes.
FOCUS OF THE REVIEW
The ratings review will focus on: (1) the progress that UniCredit and
KazNitrogenGaz LLP make towards implementing the ATF Bank transaction;
(2) the strategy which the new shareholder will be aiming to introduce in ATF
Bank when it obtains control; (3) the direct impact of the the transaction on
the bank's financial fundamentals and funding profile; and (4) the structure
of the proposed transaction in respect of problem loans that are currently
under-provisioned and covered by the parent's guarantees, i.e., enabling
ATF Bank to enhance its capital base.
Headquartered in Almaty, Kazakhstan, ATF Bank reported total assets of
KZT852 billion ($5.7 billion) and total shareholder equity of KZT71 billion
($474 million) as at YE2012 under unaudited regulatory reports.
The principal methodology used in this rating was Moody's Consolidated Global
Bank Rating Methodology published in June 2012. Please see the Credit Policy
page on www.moodys.com for a copy of this methodology.
[2013-03-29]