MOODY'S DOWNGRADES EXIMBANK KAZAKHSTAN'S DEPOSIT RATINGS TO B3

/REUTERS, Moscow, September 15, 08/ London - Moody's Investors Service has today downgraded the long-term local and foreign currency deposit ratings of Eximbank Kazakhstan (Eximbank) to B3 from B2. At the same time, the rating agency affirmed the bank's E+ bank financial strength rating (BFSR) and Not Prime short-term deposit ratings. All of the bank's ratings carry a stable outlook following the downgrade. Moody's rating action has been prompted by a weakening of Eximbank's liquidity position and an increased volatility in its highly concentrated funding base. Additionally, the bank's dependence on a limited number of customer accounts - the largest of which accounts for about 20% of the bank's total liabilities - depresses the bank's liquidity position and its ability to finance a sustainable business growth. Currently, Eximbank's funding comes from corporate accounts and deposits, and local market bonds. According to the bank, it intends to diversify its funding base through private deposits and increased local bond issuances. However Moody's believes that any possible positive impact of the planned measures on the bank's liquidity stance has yet to be seen and might take a considerable time to materialise. Moody's notes that currently Eximbank's ratings have little upside potential; however, in the medium term, an improved liquidity profile coupled with sound financial fundamentals could have positive rating implications. Conversely, downward pressure could be exerted on the bank's ratings as a result of a further material weakening of its liquidity position. A substantial increase in problem loans would also weigh negatively on the bank's ratings. Eximbank is majority owned by Central Asian Power and Energy Company (CAPEC) which held 68.14% of total shares as at mid-2008. CAPEC is a holding company with investments in electricity generation and distribution, chemical production, transport, and other sectors. With a head office in Almaty, Eximbank Kazakhstan reported total assets of USD321 million, equity of USD100 million and net income of USD4.8 million at year-end 2007 according to the bank's audited IFRS financial statements. London Reynold R. Leegerstee Managing Director Financial Institutions Group Moody's Investors Service Ltd. JOURNALISTS: 44 20 7772 5456 SUBSCRIBERS: 44 20 7772 5454 London Armen L. Dallakyan Analyst Financial Institutions Group Moody's Investors Service Ltd. JOURNALISTS: 44 20 7772 5456 SUBSCRIBERS: 44 20 7772 5454 [2008-09-16]