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Rating Action:

Moody's assigns Counterparty Risk Ratings to 17 Turkish banks

13 Jun 2018

Ratings are assigned following 6 June 2018 update to Moody's Banks rating methodology

London, 13 June 2018 -- Moody's Investors Service has today assigned Counterparty Risk Ratings (CRR) to all 17 rated Turkish banks indicated at the end of this press release.

Moody's Counterparty Risk Ratings are opinions of the ability of entities to honour the uncollateralized portion of non-debt counterparty financial liabilities (CRR liabilities) and also reflect the expected financial losses in the event such liabilities are not honoured. CRR liabilities typically relate to transactions with unrelated parties. Examples of CRR liabilities include the uncollateralized portion of payables arising from derivatives transactions and the uncollateralized portion of liabilities under sale and repurchase agreements. CRRs are not applicable to funding commitments or other obligations associated with covered bonds, letters of credit, guarantees, servicer and trustee obligations, and other similar obligations that arise from a bank performing its essential operating functions.

RATINGS RATIONALE

Moody's said that the CRRs assigned to Turkish banks are in line with their Counterparty Risk Assessments (CR Assessment) already outstanding.

Because Moody's considers Turkey a jurisdiction with a non-operational resolution regime, in assigning CRRs to the Turkish banks subject to this rating action, the rating agency starts with the banks' adjusted Baseline Credit Assessment (BCA) and uses the agency's existing basic Loss-Given-Failure (LGF) approach; Moody's basic LGF analysis provides one notch of uplift from the banks' adjusted BCAs.

Furthermore, for seven banks the CRR incorporates some uplift from government support, deriving from Moody's expectation of very high or high probability of government support, in line with the rating agency's assumptions on senior unsecured debt and deposits. For six banks (Akbank TAS, Export Credit Bank of Turkey A.S., T.C. Ziraat, Turkiye Is Bankasi A.S., Turkiye Sinai Kalkinma Bankasi A.S., Turkiye Vakiflar Bankasi TAO) the uplift on the CRR from government support is one notch, and for one bank (Turkiye Halk Bankasi) the uplift on the CRR from government support is higher at two notches because of its lower adjusted BCA.

Finally, Moody's has assigned CRR in the National Scale Rating (NSR) to the seven banks that already have deposit ratings in NSR: Alternatifbank A.S., HSBC Bank A.S. (Turkey), ING Bank A.S. (Turkey), Odea Bank A.S., Sekerbank T.A.S., Turkiye Garanti Bankasi A.S., Yapi ve Kredi Bankasi A.S.

OUTLOOK

CRR do not carry outlooks. The long-term CRRs of all Turkish banks are on review for downgrade, reflecting the review on the banks' standalone baseline credit assessments (BCA) (https://www.moodys.com/research/--PR_384576) and the review on Turkey's Ba2 sovereign debt rating (https://www.moodys.com/research/--PR_384169).

For four banks, only the long-term NSR CRR is on review for downgrade (Alternatifbank A.S., ING Bank A.S. (Turkey), Turkiye Garanti Bankasi A.S., Yapi ve Kredi Bankasi A.S.), reflecting high NSR CRR between Aaa.tr and Aa2.tr. For three banks (HSBC Bank A.S. (Turkey), Odea Bank A.S., Sekerbank T.A.S.), both long-term and short-term NSR CRR are on review for downgrade, reflecting lower NSR CRR between A1.tr and Baa3.tr.

FACTORS THAT COULD LEAD TO AN UPGRADE/DOWNGRADE

An upgrade of CRRs is unlikely at the moment, given the current reviews for downgrade.

A downgrade of the CRRs could be driven by a downgrade of Turkish banks' standalone BCAs, which are currently on review for downgrade, by a reduction of affiliate support for foreign-owned banks (Alternatifbank A.S., Denizbank A.S., HSBC Bank A.S. (Turkey), ING Bank A.S. (Turkey), QNB Finansbank AS, Turk Ekonomi Bankasi A.S., Turkiye Garanti Bankasi A.S., and Yapi ve Kredi Bankasi A.S.), or by a reduction in the capacity of the government to provide support (Akbank TAS, Export Credit Bank of Turkey A.S., T.C. Ziraat Bankasi, Turkiye Halk Bankasi A.S., Turkiye Is Bankasi A.S., Turkiye Sinai Kalkinma Bankasi A.S., and Turkiye Vakiflar Bankasi TAO), for example following a downgrade of Turkey's Ba2 sovereign debt rating, which is currently on review for downgrade.

LIST OF AFFECTED RATINGS

Issuer: Akbank TAS

..Assignments and placed on review for downgrade:

....Long-term Counterparty Risk Rating (Local and Foreign Currency), assigned Ba2

..Assignments:

....Short-term Counterparty Risk Rating (Local and Foreign Currency), assigned NP

Issuer: Alternatifbank A.S.

..Assignments and placed on review for downgrade:

....Long-term Counterparty Risk Rating (Local and Foreign Currency), assigned Ba1

....NSR Long-term Counterparty Risk Rating, assigned Aaa.tr

..Assignments:

....Short-term Counterparty Risk Rating (Local and Foreign Currency), assigned NP

....NSR Short-term Counterparty Risk Rating, assigned TR-1

Issuer: Denizbank A.S.

..Assignments and placed on review for downgrade:

....Long-term Counterparty Risk Rating (Local and Foreign Currency), assigned Ba2

..Assignments:

....Short-term Counterparty Risk Rating (Local and Foreign Currency), assigned NP

Issuer: Export Credit Bank of Turkey A.S.

..Assignments and placed on review for downgrade:

....Long-term Counterparty Risk Rating (Local and Foreign Currency), assigned Ba2

..Assignments:

....Short-term Counterparty Risk Rating (Local and Foreign Currency), assigned NP

Issuer: HSBC Bank A.S. (Turkey)

..Assignments and placed on review for downgrade:

....Long-term Counterparty Risk Rating (Local and Foreign Currency), assigned Ba3

....NSR Long-term Counterparty Risk Rating, assigned A2.tr

....NSR Short-term Counterparty Risk Rating, assigned TR-1

..Assignments:

....Short-term Counterparty Risk Rating (Local and Foreign Currency), assigned NP

Issuer: ING Bank A.S. (Turkey)

..Assignments and placed on review for downgrade:

....Long-term Counterparty Risk Rating (Local and Foreign Currency), assigned Ba1

....NSR Long-term Counterparty Risk Rating, assigned Aaa.tr

..Assignments:

....Short-term Counterparty Risk Rating (Local and Foreign Currency), assigned NP

....NSR Short-term Counterparty Risk Rating, assigned TR-1

Issuer: Odea Bank A.S.

..Assignments and placed on review for downgrade:

....Long-term Counterparty Risk Rating (Local and Foreign Currency), assigned Ba3

....NSR Long-term Counterparty Risk Rating, assigned A1.tr

....NSR Short-term Counterparty Risk Rating, assigned TR-1

..Assignments:

....Short-term Counterparty Risk Rating (Local and Foreign Currency), assigned NP

Issuer: QNB Finansbank AS

..Assignments and placed on review for downgrade:

....Long-term Counterparty Risk Rating (Local and Foreign Currency), assigned Ba1

..Assignments:

....Short-term Counterparty Risk Rating (Local and Foreign Currency), assigned NP

Issuer: Sekerbank T.A.S.

..Assignments and placed on review for downgrade:

....Long-term Counterparty Risk Rating (Local and Foreign Currency), assigned B2

....NSR Long-term Counterparty Risk Rating, assigned Baa3.tr

....NSR Short-term Counterparty Risk Rating, assigned TR-3

..Assignments:

....Short-term Counterparty Risk Rating (Local and Foreign Currency), assigned NP

Issuer: T.C. Ziraat Bankasi

..Assignments and placed on review for downgrade:

....Long-term Counterparty Risk Rating (Local and Foreign Currency), assigned Ba2

..Assignments:

....Short-term Counterparty Risk Rating (Local and Foreign Currency), assigned NP

Issuer: Turk Ekonomi Bankasi A.S.

..Assignments and placed on review for downgrade:

....Long-term Counterparty Risk Rating (Local and Foreign Currency), assigned Ba1

..Assignments:

....Short-term Counterparty Risk Rating (Local and Foreign Currency), assigned NP

Issuer: Turkiye Garanti Bankasi A.S.

..Assignments and placed on review for downgrade:

....Long-term Counterparty Risk Rating (Local and Foreign Currency), assigned Ba2

....NSR Long-term Counterparty Risk Rating, assigned Aa1.tr

..Assignments:

....Short-term Counterparty Risk Rating (Local and Foreign Currency), assigned NP

....NSR Short-term Counterparty Risk Rating, assigned TR-1

Issuer: Turkiye Halk Bankasi A.S.

..Assignments and placed on review for downgrade:

....Long-term Counterparty Risk Rating (Local and Foreign Currency), assigned Ba3

..Assignments:

....Short-term Counterparty Risk Rating (Local and Foreign Currency), assigned NP

Issuer: Turkiye Is Bankasi A.S.

..Assignments and placed on review for downgrade:

....Long-term Counterparty Risk Rating (Local and Foreign Currency), assigned Ba2

..Assignments:

....Short-term Counterparty Risk Rating (Local and Foreign Currency), assigned NP

Issuer: Turkiye Sinai Kalkinma Bankasi A.S.

..Assignments and placed on review for downgrade:

....Long-term Counterparty Risk Rating (Local and Foreign Currency), assigned Ba2

..Assignments:

....Short-term Counterparty Risk Rating (Local and Foreign Currency), assigned NP

Issuer: Turkiye Vakiflar Bankasi TAO

..Assignments and placed on review for downgrade:

....Long-term Counterparty Risk Rating (Local and Foreign Currency), assigned Ba3

..Assignments:

....Short-term Counterparty Risk Rating (Local and Foreign Currency), assigned NP

Issuer: Yapi ve Kredi Bankasi A.S.

..Assignments and placed on review for downgrade:

....Long-term Counterparty Risk Rating (Local and Foreign Currency), assigned Ba2

....NSR Long-term Counterparty Risk Rating, assigned Aa2.tr

..Assignments:

....Short-term Counterparty Risk Rating (Local and Foreign Currency), assigned NP

....NSR Short-term Counterparty Risk Rating, assigned TR-1

PRINCIPAL METHODOLOGY

The principal methodology used in these ratings was Banks published in June 2018. Please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.

Moody's National Scale Credit Ratings (NSRs) are intended as relative measures of creditworthiness among debt issues and issuers within a country, enabling market participants to better differentiate relative risks. NSRs differ from Moody's global scale credit ratings in that they are not globally comparable with the full universe of Moody's rated entities, but only with NSRs for other rated debt issues and issuers within the same country. NSRs are designated by a ".nn" country modifier signifying the relevant country, as in ".za" for South Africa. For further information on Moody's approach to national scale credit ratings, please refer to Moody's Credit rating Methodology published in May 2016 entitled "Mapping National Scale Ratings from Global Scale Ratings". While NSRs have no inherent absolute meaning in terms of default risk or expected loss, a historical probability of default consistent with a given NSR can be inferred from the GSR to which it maps back at that particular point in time. For information on the historical default rates associated with different global scale rating categories over different investment horizons, please see https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1113601.

The Local Market analyst for Alternatifbank A.S., ING Bank A.S. (Turkey), QNB Finansbank AS and Turk Ekonomi Bankasi A.S. is Nitish Bhojnagarwala, +971.4.237.9563.

REGULATORY DISCLOSURES

For ratings issued on a program, series or category/class of debt, this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this credit rating action, and whose ratings may change as a result of this credit rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.

Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.

The below contact information is provided for information purposes only. Please see the ratings tab of the issuer page at www.moodys.com, for each of the ratings covered, Moody's disclosures on the lead rating analyst and the Moody's legal entity that has issued the ratings.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.

Carlo Gori
Vice President - Senior Analyst
Financial Institutions Group
Moody's Investors Service Ltd.
One Canada Square
Canary Wharf
London E14 5FA
United Kingdom
JOURNALISTS: 44 20 7772 5456
Client Service: 44 20 7772 5454

Sean Marion
MD - Financial Institutions
Financial Institutions Group
JOURNALISTS: 44 20 7772 5456
Client Service: 44 20 7772 5454

Releasing Office:
Moody's Investors Service Ltd.
One Canada Square
Canary Wharf
London E14 5FA
United Kingdom
JOURNALISTS: 44 20 7772 5456
Client Service: 44 20 7772 5454

No Related Data.
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