Fitch Affirms Kazakhstan's Alliance Bank JSC at 'BB-'; Assigns Upcoming EUR Eurobond 'BB-' Rating

/Fitch Ratings, January 22, 07, KASE's heading/ - Fitch Ratings has today affirmed Kazakhstan-based Alliance Bank's ("Alliance") ratings at Issuer Default 'BB-' (BB minus), Short-term 'B', Individual 'D' and Support '3'. The Outlook on the Issuer Default rating ("IDR") remains Stable. Fitch has also assigned the upcoming EUR issue of senior unsecured notes under Alliance's and ALB Finance B.V.'s USD1.5 billion global medium-term note programme an expected Long-term 'BB-' (BB minus) rating. The final rating is contingent on the receipt of final documents conforming to information already received. The programme's ratings for senior unsecured notes are Long-term 'BB-' (BB minus) and Short-term 'B' (refer to Fitch's statement dated 30 March 2006 for the programme's main terms and conditions). The IDR, Short-term and Support ratings reflect Fitch's view of the moderate likelihood of state support being available to Alliance if needed. The Individual rating reflects the risks associated with Alliance's very rapid growth, its occasionally tight capitalisation and refinancing and structural risks arising from the high share of foreign funding, as well as certain weaknesses in the operating environment. However, it also considers the bank's successful business development, sound asset quality to date and adequate liquidity. "There is no further upward potential for the support floor of Alliance's IDR, given Fitch's current view of the authorities' propensity to provide support to banks of Alliance's size," notes Alexei Kechko, Associate Director of Fitch's Financial Institutions Group in Moscow. "Although significant further gains in market shares could cause Fitch to reconsider its view of the sovereign's propensity to provide support to Alliance, we note that the bank is currently planning to moderate its growth to rates similar to those of competitors." Positive factors for the Individual rating could be a significant moderation of current growth rates, improvement in franchise and better profitability. Downward pressure on the IDR could come from a reduced capacity of the sovereign to provide support, which, however, is not expected given the Positive Outlook on Kazahkstan's IDRs. Downward pressure on the Individual rating could result from significant deterioration in asset quality resulting from currently rapid growth or a further decline in capitalisation. Alliance is controlled by Seimar Alliance Financial Corporation, which is in turn owned by three brothers. The bank has been growing very rapidly and was the fourth-largest in Kazakhstan by assets as of 30 September 2006. Strategy is focused on retail lending and lending to small- to medium-sized enterprises. Contacts: Alexei Kechko, James Watson, Moscow, Tel: +7 495 956 9901 Media Relations: Julian Dennison, London, Tel: +44 20 7862 4080 Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site. [2007-01-22]