Liquidity squeeze may impact results for Kazakh, Russian, and Ukrainian banks, says report - S&P

/Standard & Poor's, Paris, September 10, 07/ - The largest banks in Kazakhstan, Russia, and Ukraine (KR&U) continue to perform well, but also face tight liquidity and increased market risks, said Standard & Poor's Ratings Services in a new report titled, "Improved Financials At Big Kazakh, Russian, And Ukrainian Banks Hurt By Liquidity, Market Risk." "Near-term growth and profitability prospects may be stunted by the current difficult environment in global credit markets, which has led to a liquidity squeeze and strained the banks' refinancing plans, particularly in international debt and capital markets," said Standard & Poor's credit analyst Ekaterina Trofimova. Standard & Poor's will hold a teleconference on Thursday, Sept. 13, 2007, to discuss the prospects for banks in Russia, Kazakhstan, and Ukraine, especially in light of the difficult conditions currently prevailing in the global credit markets. The call will begin at: - 5:00 p.m. Moscow time; - 3:00 p.m. Central European Time; - 2:00 p.m. London time; and - 9:00 a.m. Eastern Time. See section "Teleconference Information" below for access details. International debt issuance in KR&U is likely to be more protracted and costly than in the recent past. Although we consider the present liquidity squeeze to be temporary - given the improving fundamentals in the economic and industry risks of KR&U banking systems - the squeeze does highlight the funding and liquidity vulnerabilities that structurally affect the banks in these three countries. "We factor these vulnerabilities into the current ratings on large KR&U banks, however, and we do not expect any negative rating actions to result from the current market situation, unless they start affecting the fundamentals, and we are monitoring the situation carefully," said Ms. Trofimova. Most of the largest KR&U banks reported improved profitability ratios in 2006 and the first half of 2007, and many of them managed to maintain stable interest margins in comparison with 2005. Major drivers of the banks' good financial performance were: organic expansion; differentiation strategies that focus on certain market or geographic segments; product line diversification; improving information technology; and more-sophisticated marketing policies. This positive trend - as well as improving commercial and financial profiles, franchise, and risk management - led to a number of upgrades in the past eight months. Weak points remain rising operating costs, an increasingly tough and costly funding situation, tight capitalization, high single-name concentration in both funding and lending, and - although moderate - some worsening loan quality. Overall, Standard & Poor's expects KR&U banks to maintain performance at levels consistent with current ratings. The positive ratings momentum of recent years is likely to slow, however, given the continuing vulnerabilities faced by KR&U banking systems. Standard & Poor's will be publishing a bank industry risk analysis commentary this week, which will provide a more detailed assessment of risks facing the Russian banking sector. Teleconference Information Standard & Poor's will hold a teleconference on Thursday, Sept. 13, 2007, to discuss the prospects for banks in Russia, Kazakhstan, and Ukraine, especially in light of the difficult conditions currently prevailing in the global credit markets. The call will begin at: - 5:00 p.m. Moscow time; - 3:00 p.m. Central European time; - 2:00 p.m. London time; and - 9:00 a.m. New York time. The call will be hosted by John Gibling, Director and Head of EEMEA Bank Ratings. Also participating will be senior analysts Ekaterina Trofimova, Financial Institutions, and Frank Gill, Sovereign Ratings. They will be joined by Magar Kouyoumdjian and Eugene Tarzimanov, both from Financial Institutions Ratings, to address any questions that you may have in the Q&A session. To participate in the call, please dial: - U.K. local call: 0845 146 2002 - U.S. toll-free number: (1) 866 389 9776 - International dial in: (44) 1452 569 114 The title of the teleconference is "Prospects For Russian, Kazakh, And Ukrainian Banks: Navigating Through The Current Global Credit Squeeze." The teleconference will begin promptly at the time indicated. Please dial in at least 15 minutes before the scheduled start to complete the pre-call registration process. If the number you dial is busy, please call one of the other numbers. There is no charge to participate other than long-distance telephone charges, if applicable. Participants will be asked to provide their name, company affiliation, and fax number or e-mail address. The entire call will last approximately 60 minutes. The call will also be available live in "listen-only" mode from the home page of Standard & Poor's Web site for listeners worldwide with PCs equipped with the Real PlayerЩ software, sound card, and speakers. Point your web browser at www.standardandpoors.com and follow the link for "Events." Recorded replays of the call will also be made available about one hour after the call concludes. To listen to a replay of the call, please dial: - International replay: (44) 1452 55 00 00, access code: 16488405# - U.K. local call replay: 0845 245 5205, access code: 16488405# - U.S. toll-free replay: (1) 866 247 4222, access code: 16488405# If you have any questions about the teleconference, please contact Fleur Hollis at (44) 20-7176-7212 or via e-mail: Fleur_Hollis@standardandpoors.com Contact: Ekaterina Trofimova, Paris (33) 1-4420-6786; ekaterina_trofimova@standardandpoors.com Elena Romanova, Moscow (7) 495-783-40-91; elena_romanova@standardandpoors.com John Gibling, London (44) 20-7176-7209; john_gibling@standardandpoors.com Magar Kouyoumdjian, London (44) 20-7176-7217; magar_kouyoumdjian@standardandpoors.com Eugene Tarzimanov, Moscow (7) 495-783-4071; eugene_tarzimanov@standardandpoors.com Ekaterina Novikova, Moscow (7) 495-783-4017; ekaterina_novikova@standardandpoors.com Armelle Sens, Paris (33) 1-4420-6740; armelle_sens@standardandpoors.com [2007-09-11]