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Fitch affirms Kapital Bankâ€™s ratings

08 June 2009 14:42 (UTC +04:00)

Baku. Elmin Ibrahimov â€“ APA-Economics. Fitch Ratings has affirmed Kapital Bank’s (Kapital) ratings at Long-term Issuer Default (IDR) ’B+’ with Stable Outlook, Short-term IDR ’B’ and Individual ’D/E’, reported BNE portal (www.businessneweurope.eu).

Fitch notes that although recent privatization has eliminated state ownership and thus, in the agency’s view, reduced the authorities’ propensity to support the bank (as reflected in its downgrade in July 2008 to ’B+’ from ’BB-’), it believes Kapital will continue to be systemically important. Kapital distributes pensions and other social payments through its large nation-wide network and services state entities and regional treasury accounts countrywide. Those functions are underpinned by the bank’s, thus far, unmatched network in the country, especially in regions, comprising 88 branches/sub-branches, some 90 other outlets and 300 ATMs.

The Individual Rating reflects the bank’s limited banking franchise and short track record, and also considers risks stemming from worsening asset quality, which has yet to be tested though an economic cycle. The bank’s capital position, profitability and liquidity are, however, adequate at present.

Any change in the sovereign’s rating could change its ability to support the bank and thus might affect Kapital’s ratings. Any change in Fitch’s view on the authorities’ propensity to support the bank, and, in particular, therefore its systemic importance, especially in the area of social payments, could also impact Kapital’s ratings. Downward pressure on the Individual Rating could arise from a marked further deterioration in asset quality.

Kapital was the third-largest bank in Azerbaijan by asset and retail deposits at end-2008 with market shares of 5.6% and 8.6%, respectively.

The ratings are as follows:

Long-term foreign currency IDR: affirmed at ’B+; Outlook Stable

Short-term foreign currency IDR: affirmed at ’B

Individual Rating: affirmed at ’D/E’

Support Rating: affirmed at ’4’

Support Rating Floor: affirmed at ’B+’