Fitch Upgrades rating of JSC Alliance Bank to the level of B-after the completion of restructuring

/IRBIS, July 20, 2010/ - Fitch Ratings upgraded the long-term issuer default rating (IDR) Alliance Bank, Kazakhstan, in foreign currency at the level of "RD" (restricted defaulted) to "B-" and assigned a Stable rating outlook , reported on July 19 rating agency. As indicated, this rating action follows the completion of restructuring liabilities of the bank and is the result of the review rating of the bank, initiated by Fitch March 31, 2010. "The ratings reflect the Alliance Bank, its weak asset quality, negative equity under IFRS difficult task of refocusing the bank's business, poor revenue generation, is still heavily dependent on funding from capital markets and the lack of historical data after the completion of the restructuring of debt. However, the ratings take into account the benefits from the state control of bank, including a moderate potential of state in the future if necessary ", - stated in the message. As of April 1, 2010 Alliance Bank had a weak asset quality, and redundancy for impairment amounted to about 70% of the loan portfolio. The Bank uses the internal division of the credit portfolio on a "good and bad" portfolio, while in the latter category at the end of the first quarter of 2010 accounted for 77% of the loans, which included all loans with signs of impairment or some potential problem characteristics. Fitch does not exclude the possibility that the bank may have excess reserves, and the repayment of funds may exceed levels that can be assumed at the current reserve, but the medium term. In particular, Fitch notes that in respect of a substantial number of borrowers in the "bad" portfolio conduct criminal investigations or trials, which involved former owners and managers of the bank. It is noted that despite the fact that after the restructuring of the bank performs the regulatory requirements of Kazakhstan in terms of capitalization; according to management reporting under IFRS at the end of the first quarter of 2010 equity was negative. This is explained by the fact that KZT111 billion in the form of preferred shares owned by the state fund SamrukKazyna, and restructured the claims of creditors of the bank accounted for under IFRS as a liability rather than equity. Achieving sustainable generate capital through earnings is one of the most important and possibly difficult tasks for the bank, especially given Fitch's expectation is only slightly positive constant earnings before deductions for impairment in 2010. On a net profit of the bank will greatly affect collection of credits and deductions for impairment. The report stated that although the funding structure of the Alliance Bank has stabilized after the restructuring, structural change and improve the quality of funding will be an easy task, as the competition for investors increases, while the Bank of covenants should not involve new funding from the capital markets in the medium term. Fitch does not exclude the possibility that the bank may benefit from additional funding from the state, in addition to funds already received from SamrukKazyna and the Development Bank of Kazakhstan ("BBB-"/Stable). Positive structural breaks on the timing and less burdensome amount of redemptions in the second half of 2010 support the liquidity of the bank in the short term. Fitch takes into account in the ratings of Alliance Bank a reasonable possibility that he will be given support from the Government of Kazakhstan, if necessary. However, Alliance Bank's ratings also take into account Fitch's view that the bank does not represent a strategic investment for SamrukKazyna, and expectations of the agency that the potential of state may diminish with continued government implementation plan for selling the bank in the medium term. Ask the bank would review the agency Issuer Default. "A favorable factor for the solvency of the bank may be evidence of improving the financial sustainability after the restructuring, including through the restoration of capital base, improved performance and greater diversification of funding base. But in the event of termination of funding support from the State or unsecured loan loss reserves (if happen) in the future may pressure the ratings downward "- stated in the message. A list of rating actions carried out: - Long-term foreign currency IDR upgraded from "RD" to "B-", outlook Stable - Long-term local currency IDR is assigned at the level of "B-", outlook Stable - Short-term foreign currency IDR upgraded from "RD" to "B" - Individual rating upgraded from "F" to "E" - Support rating affirmed at '5 " - Support Rating Floor: affirmed at 'No supporting Floor' - unsecured debt: rating upgraded from "C" to "B-", rating the asset return "RR4" - Subordinated debt: the rating assigned at the level of "CC", rating the asset return "RR6". [2010-07-20]