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Â«Moodyâ€™sÂ»: Single-client concentration level of loans in CIS countriesâ€™ banks is high

13 December 2010 07:50 (UTC +04:00)

Baku â€“ APA-Economics. International rating agency Moodyâ€™s Investors Services has published its second annual survey report entitled "Moodyâ€™s annual survey of Russian and CIS banksâ€™ single-client concentrations".

The Agency says that single-client concentrations in loans are increasing. Moodyâ€™s believes that these trends are likely to continue in 2011.

"Among other risk factors affecting these banks, high credit and liquidity risks linked to single-client concentrations have contributed to low bank ratings in the CIS region,â€ it was reported.

Moodyâ€™s has identified that high concentrations were at the root of many bank defaults in the region.

Moodyâ€™s has identified that high concentrations were at the root of many bank defaults in the region.

Large exposures to selected borrowers leads to high credit risk and could materially impact asset quality, profitability and capitalisation if those borrowers default.

Moodyâ€™s also considers that depositor confidence in the region remains relatively fragile, making banks vulnerable to sudden withdrawals of large deposits.