Long-term deposit ratings are on review with direction uncertain
London, 09 October 2008 -- Moody's Investors Service has today downgraded
the bank financial strength rating (BFSR) of Prominvestbank to E from E+,
its long-term local currency and foreign currency bank deposit ratings to
Caa2 from Ba2 and B2, respectively, and its National Scale Rating (NSR)
to B3.ua from Aa1.ua. Long-term deposit ratings have been placed on
review with direction uncertain.
"The rating action is in response to the announcement that the National
Bank of Ukraine (NBU) has taken control of Prominvestbank following the
concerns about the bank's ability to continue its operations as a viable
stand-alone entity," says Yaroslav Sovgyra, Moody's lead Analyst for
Prominvestbank. Moody's underlines that prior to taking control of
Prominvestbank, the NBU has provided an extraordinary support to the bank
in the form of emergency liquidity line of 5 billion Hryvnya. The
Ukrainian legislation gives the NBU powers such as limiting or
prohibiting the disposal of the banks' capital and assets and imposing
temporary restrictions on payments to creditors. The NBU has already
announced a temporary moratorium on payments to creditors over the period
of six months.
In downgrading the BFSR to E from E+, Moody's explains that
Prominvestbank's franchise and the overall credit profile have been
significantly impaired in light of the recently experienced run on
deposits by the bank.
The rating review with direction uncertain captures the present
uncertainty with regard to the possible outcomes of Prominvestbank's
current situation, as the NBU is currently investigating potential
solutions as regards Prominvestbank. On the one hand, if the bank manages
to receive additional support either from the regulatory authorities or
from a financially stronger strategic partner that assumes its
obligations, Moody's would be likely to upgrade Prominvestbank's deposit
ratings. On the other hand, if the bank fails to attract a potential
strategic partner, it likely to be liquidated, which would merit further
rating downgrades.
The previous rating action on Prominvestbank was implemented on 1 October
2008, when Moody's placed Prominvestbank's ratings on review for
possible downgrade due to concerns that the run on deposits currently
being experienced by the bank may have a significant negative impact on
its franchise, already tight liquidity position and the funding profile.
Headquartered in Kiev, Ukraine, Prominvestbank reported unaudited
consolidated total assets of UAH27.5 billion (US$5.7 billion) and total
equity of UAH 2.8 billion (US$577 million) according to Ukrainian
Accounting Standards at 30 June 2008. |
