Azerbaijan, Baku, Oct. 28 / Trend E. Kosolapova/
Standard & Poor's Ratings Services had lowered its long-term counterparty credit rating on Kazakhstan-based Alliance Bank JSC to 'CCC' from 'CCC+' and affirmed the short-term counterparty credit rating at 'C', the agency reported on Monday. The outlook is negative.
At the same time, S&P lowered the Kazakhstan national scale rating on the bank to 'kzCCC+' from 'kzB'.
"The rating actions follow Samruk-Kazyna's announcement on Oct. 10, 2013, that it had reached a nonbinding preliminary agreement with Bulat Utemuratov to sell some of its shares in Alliance Bank. In our opinion, the sale will likely conclude within the next two years, and we see diminished prospects for further extraordinary support for Alliance Bank from Samruk-Kazyna, a government-owned entity that manages the country's assets," the agency said.
S&P has reassessed Alliance Bank's link with the Kazakh government to "limited" from "strong," and the likelihood of extraordinary support to "low" from "moderate". As a result, the agency has removed the one-notch uplift for likely government support from the long-term rating.
Meanwhile S&P expects Samruk-Kazyna to retain its long-term deposits at the bank, even after a sale, to avoid destabilizing the bank's funding and liquidity profiles.
"The preliminary agreement envisages the ultimate sale of Alliance Bank, but we believe the sale of a controlling stake could take some time to realize...In our view, this capital deficiency would likely need to be addressed to enable the sale of Alliance Bank as a viable business, S&P said.
S&P noted that Samruk-Kazyna's announcement cited the possibility of a future merger of Temirbank and Alliance Bank. However, the agency considers this highly uncertain over the next 12 months and currently do not factor it into the ratings on Alliance Bank.
The negative outlook on Alliance Bank reflects S&P uncertainty that the government or new shareholder would provide sufficient capital to enable the bank to meet Basel capital adequacy requirements.
S&P would take a negative rating action if it saw an increased risk of default, for example because of a vulnerable liquidity position.
The agency could take a positive rating action on the bank following a significant shareholder capital injection, resulting in a projected risk-adjusted capital ratio that exceeded 3 percent.
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