YEREVAN, August 17. /ARKA/. Fitch Ratings has affirmed and withdrawn the ratings of VTB Bank (Armenia) (VTBA), including its Long-term Issuer Default ratings (IDR) at ‘BB’, the press office of Fitch Ratings reported on Tuesday.
Fitch will no longer provide ratings or analytical coverage of VTBA.
“Long-term foreign and local currency IDRs: affirmed at ‘BB’ with Stable Outlook; withdrawn. Short-term foreign and local currency IDRs: affirmed at ‘B’; withdrawn. Individual Rating: affirmed at ‘D/E’; withdrawn. Support Rating: affirmed at ‘3’; withdrawn,” the press release says.
Yury Gusev, director of the bank’s financial division, commenting this, told ARKA News Agency that VTB group is now running a campaign to centralize the lending program of all its members.
He said that under the new lending strategy, the VTB Bank (Armenia) doesn’t plan to enter outside markets independently.
“Taking into account this factor as well as the bank’s expenditure optimization campaign, we have decided to suspend our cooperation with Fitch Ratings,” Gusev said.
VTB Bank (Armenia) CJSC joined VTB Group in April 2004.
Now VTB OJSC, the second largest bank in Russia, holds 100% of the VTB Bank (Armenia)’s shares.
VTB Bank (Armenia) is traditionally ranked among leaders of Armenian banking system thanks to some indicators.
The bank has 68 branches in Armenia. This is the biggest branch network in the country.
The IDRs of VTBA reflect Fitch’s view of the moderate probability of support being forthcoming, if required, from its owner, Russia’s JSC VTB Bank (VTB; ‘BBB’/Stable/’F3’). This is based on VTB’s 100% ownership, the strategic importance of CIS markets for VTB and the small size of VTBA relative to its parent. However, the extent to which this support can be factored into the ratings is limited by Armenian transfer and convertibility risks, as captured in the ‘BB’ Country Ceiling.
The Individual Rating of ‘D/E’ reflects the high proportion of foreign currency loans, operational risks associated with its branch network, the still significant dependence on the parent for funding and liquidity support and a difficult, albeit improving, operating environment. However, it also takes into account the bank’s solid capitalization, the recent stabilization of asset quality metrics and the significant domestic franchise. -0-
