Finance

Finance

CIS banks leaves behind the peak time of default

31 March 2010 14:32 (UTC +04:00)

Baku â€“ APA-Economics. The global financial crisis has led to a significant number of defaults among banks in the Commonwealth of Independent States (CIS), according to Moodyâ€™s.
However, with the adverse operating conditions beginning to show some signs of easing, the incidence of default has likely peaked, the rating agency said in a new report that documents the 23 cases of default among the 190 rated institutions in the CIS. All 23 cases were rated into the speculative-grade territory before the crisis.

About 10% of the rated banks in the CIS region have investment grade ratings after incorporating assumptions of external support. As the crisis unfolded, we saw many instances of support from national governments and/or the foreign owners of these institutions, which helped many of them weather the financial crisis and, in a few cases, avoid default.

With depositor confidence remaining weak throughout the CIS region, default risk is still high, as suggested by the Moodyâ€™s ratings which are in speculative grade territory for about 90% of the banking institutions covered in that region. The report notes that runs on bank deposits were a key contributing factor in about half of the CIS defaults documented since the beginning of the crisis.