YEREVAN, April 1. /ARKA/. Fitch Ratings has affirmed ACBA-CREDIT AGRICOLE BANK CJSC’s (ACBA) and Ardshinbank’s (Ardshin) Long-Term Foreign-Currency Issuer Default Ratings (IDRs) at ‘B+’ with Stable Outlooks.
Fitch Ratings said the IDRs and senior debt ratings of both banks are driven by their intrinsic strength, as captured by their ‘b+’ Viability Ratings (VRs). The affirmation of both banks’ VRs reflects limited changes in their credit profiles since the previous rating actions a year ago.
It said the VRs continue to reflect a cyclical local economic environment, which translates into potentially vulnerable asset quality, and high dollarisation. The VRs also capture the banks’ stable asset quality, supported by a cyclical upswing of the economy, reasonable capital and liquidity buffers (both stronger at ACBA) and moderate profitability.
The banks’ Support Rating Floors of ‘No Floor’ and Support Ratings of ‘5’ reflect Fitch’s view that the Armenian authorities have limited financial flexibility to provide extraordinary support to banks, if necessary, given the banking sector’s large foreign-currency liabilities relative to the country’s international reserves. Potential support from the private shareholder is not factored into Ardshin’s ratings, as it cannot be reliably assessed.
Fitch Ratings said the ratings could be downgraded if a weaker operating environment or a material increase in risk appetite results in a marked deterioration of the banks’ asset quality and erodes their profitability and capital without being sufficiently and pre-emptively addressed by the shareholders.
ACBA was established in 1996 as part of EU’s TACIS program. As a result of a long-term and mutually beneficial cooperation between ACBA Bank and the French Credit Agricole the latter became the biggest shareholder of ACBA in 2006, September. ACBA was restructured, becoming a closed joint stock company and was renamed ACBA CREDIT AGRICOLE BANK.
Ardshinbank was founded in 2002. It is one of the three top banks of Armenia and the only private company that has been assigned Moody’s and Fitch ratings. -0-
