The international agency Fitch Ratings will reconsider ratings of OJSC International Bank of Azerbaijan (IBA). We recall the long-term issuer default rating, support rating and senior unsecured debt rating of the bank is located at the level of BB, and the viability rating - B-.
It seems that the recent presidential decree on the financial restructuring of the IBA and the subsequent clarification of bank management that it includes a significant redemption of troubled assets (AZN 1 billion or 11% of gross loans) at the book value of the level of the end of the current fiscal year will be the reason for the improved forecast
According to experts, in the case of getting rid of risky assets support rating and long-term issuer default rating could rise to the level of BB +. At the same time, according to the bank's management, the preparatory period for the privatization can last up to 5 years. This means that in the medium term, the bank is likely to remain in state ownership. Even if privatization and held, the IBA will systemically important as a major bank in the country, and save significant business with companies controlled by the government.
High systemic importance of the IBA comes from its large internal franchise (bank accounts extended to 35% of assets of the entire banking sector) and the substantial funding of public corporations (1.5 billion manat or 15% of commitments in the last year), as well as the prevailing share (51 07%) of the state. At the same time there is a gap between the assets and equity of the largest credit organizations in the country - 15 and 1% of GDP, respectively.
Additional issues of asset quality and corporate governance are derived from the portfolio of bills (about 700 million AZN), and are associated with in any way is not completed construction projects in Russia.
IBA is unlikely to quickly "come to his senses" and increase the influence of the capital market, the more that the prospects for credit growth decelerated limited public expenditure in connection with the collapse of oil prices, experts of the agency said. --17D-
Economics
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