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Moodyâ€™s lowers outlook on Bank Respublikaâ€™s deposit ratings

21 November 2008 08:43 (UTC +04:00)

Baku. Elmin Ibrahimov â€“ APA-Economics. Moodyâ€™s Investors Service has cut the outlook on the B2 long-term foreign and local currency deposit ratings of Azerbaijanâ€™s Bank Respublikato â€˜stableâ€™ from â€˜positiveâ€™.
"Moodyâ€™s decision to change the outlook to stable from positive reflects Respublikaâ€™s increasing appetite for credit and refinancing risk," said Lev Dorf, a Moscow-based Moodyâ€™s Associate Analyst.
The rapid growth of Respublikaâ€™s assets in recent years has been mainly funded by international borrowings which increased from US$ 28 mln in 2006 to US$ 161 mln in 2008 -- exceeding 50% of the bankâ€™s total liabilities.
"Currently high reliance on market funding renders Respublikaâ€™s liquidity position potentially vulnerable, exposing the bank to higher refinancing risk especially amid tight liquidity conditions on the international markets with limited access to wholesale funding from abroad," added Dorf.
Moodyâ€™s notes that any material deterioration in the bankâ€™s liquidity position -- including increasing reliance on liquidity support from National Bank of Azerbaijan -- will indicate weakening of the bankâ€™s standalone credit strengths and could negatively affect its deposit ratings.