Withdrawal of deposit ratings and assignment of issuer ratings
Frankfurt am Main, April 20, 2011 -- Moody's Investors Service has today downgraded the global local-currency
(GLC) deposit ratings of Turkey's Bankpozitif Kredi ve Kalkinma
Bankasi A.S. (Bankpozitif) to Ba1/Not-Prime from
Baa3/Prime-3 following the downgrade of the ratings of the bank's
parent. At the same time, Bankpozitif's Ba3/Not-Prime
foreign-currency deposit ratings were affirmed. The outlook
on the GLC deposit rating is stable and the outlook on the foreign-currency
deposit rating is positive. Furthermore, the rating agency
affirmed Bankpozitif's standalone D bank financial strength rating
(BFSR) -- mapping to Ba2 on the long-term rating
scale -- and has changed the outlook to negative from stable.
Following the downgrade of the GLC deposit ratings and the affirmation
of the foreign-currency deposit ratings, Moody's has
withdrawn those ratings due to uncertainty in the timing of the granting
of a deposit-taking permit to Bankpozitif.
At the same time, Moody's has assigned Ba1/Not-Prime
issuer ratings in local and foreign currency. The outlook on the
issuer ratings is stable. Moody's says that the issuer ratings
more suitably reflect Bankpozitif's funding structure.
RATINGS RATIONALE
BFSR AFFIRMED WITH NEGATIVE OUTLOOK
The affirmation of Bankpozitif's D BFSR reflects the overall adequate
financial fundamentals, including solid capitalisation and sound
liquidity profile. The affirmation also reflects (i) the constraints
on Bankpozitif's marginal franchise; and (ii) its reliance
on market funding, which in Moody's view limits its longer-term
franchise development prospects in the fast growing, highly competitive
and core retail-deposit-funded Turkish banking system.
The bank's profitability was adversely affected in 2009 and 2010
as a result of Bankpozitif lengthening the funding maturity profile by
greater use of longer-term market funding and a contraction in
its loan portfolio during the 2009 recession in Turkey. This led
to a decline in its market share. Although loan growth resumed
in late 2010, the rating agency cautions that profitability pressures
are adding to the challenges that Bankpozitif faces in materially developing
its franchise and strengthening its market share in Turkey. In
Moody's view, this is better reflected in the change of the
BFSR outlook to negative from stable.
DOWNGRADE OF LOCAL CURRENCY DEPOSIT RATINGS AND SUBSEQUENT WITHDRAWAL
OF DEPOSIT RATINGS
The downgrade of the GLC deposit ratings follows Moody's remapping
of the standalone C- BFSR (stable outlook) of Bankpozitif's
parent bank, Bank Hapoalim B.M. of Israel, to
Baa2 from Baa1 on the long-term rating scale (see press release
"Moody's downgrades five Israeli banks due to weak profitability").
This serves as a reference point from which to impute bank rating uplift
as a result of possible parental support.
Moody's has re-assessed the likelihood of parental support
from Bank Hapoalim as moderate, given (i) the lowered level of the
parent bank's standalone financial strength rating; and (ii)
the slow development of Bankpozitif's franchise in Turkey,
demonstrated by Bankpozitif's modest market share and sustained
marginal franchise and minor contribution to the parent's franchise.
These two factors resulted in Bankpozitif's GLC long-term
deposit rating of Ba1 incorporating a one-notch rating uplift from
its Ba2 baseline rating.
The stable outlook on the GLC deposit ratings is underpinned by Moody's
moderate parental support assumption and the higher rating of the parent
compared with that of Bankpozitif. This subdues the effect of any
potential downward rating movement of the bank's BFSR on its long-term
GLC deposit ratings.
The Ba3/Not-Prime foreign-currency deposit ratings were
affirmed (with a positive outlook) and are in all cases constrained by
the country ceiling for foreign-currency bank deposits.
This results in the assignment of a different and typically lower rating
for the foreign-currency deposits, relative to Bankpozitif's
rating for its local-currency obligations.
Due to the absence of a deposit-taking permit for Bankpozitif,
its Ba1/Not-Prime GLC deposits and Ba3/Not-Prime foreign-currency
deposits ratings have been withdrawn.
ASSIGNMENT OF ISSUER RATINGS
Moody's has assigned local and foreign-currency issuer ratings
of Ba1/Not-Prime to Bankpozitif, which reflects its ability
to honour senior unsecured financial obligations and contracts.
The Ba1/Not-Prime local-currency issuer ratings are backed
by Bankpozitif's standalone credit strength equivalent of Ba2,
plus one notch of rating uplift, due to the moderate likelihood
of support from its majority shareholder, Bank Hapoalim.
The Ba1/NP foreign-currency issuer rating is equal to the Ba1/Not-Prime
local-currency issuer rating. The applicable country ceiling
for debt ratings in Turkey is Ba1 (with a positive outlook). The
outlook of Bankpozitif's foreign-currency issuer rating follows
the stable outlook on its local-currency issuer rating.
At present, there is no upward pressure on Bankpozitif's issuer
ratings, indicated by the assigned stable outlook. Additional
negative pressure could be exerted on the BFSR if (i) the competitive
landscape in Turkey severely disrupts the bank's ability to expand
its franchise and to generate profits from its core corporate lending
business; (ii) the degree of asset quality deterioration weakens
so that external capital support is required for the bank; or (iii)
Bankpozitif's risk-appetite increases significantly to support
the bank's evolving franchise.
The issuer ratings could be downgraded in the event of (i) a multi-notch
downgrade of the BFSR; (ii) a downgrade at parent bank level;
or (iii) Moody's reconsidering its assumptions for parental support.
At present, Moody's considers these three scenarios to be
unlikely.
PRINCIPAL METHODOLOGIES
The principal methodologies used in this rating were "Bank Financial Strength
Ratings: Global Methodology" published in February 2007, "Incorporation
of Joint-Default Analysis into Moody's Bank Ratings: A Refined
Methodology" published in March 2007.
Headquartered in Istanbul, Turkey, Bankpozitif had total assets
of TRY1.7 billion (USD1.1 billion) under audited IFRS at
the end of December 2010.
REGULATORY DISCLOSURES
Information sources used to prepare the credit rating are the following:
parties involved in the ratings, public information.
Moody's Investors Service considers the quality of information available
on the issuer or obligation satisfactory for the purposes of maintaining
a credit rating.
The rating has been disclosed to the rated entity or its designated agents
and issued with no amendment resulting from that disclosure.
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Service(s) to the rated entity or its related third parties within the
three years preceding the Credit Rating Action. Please see the
ratings disclosure page www.moodys.com/disclosures on our
website for further information.
Moody's adopts all necessary measures so that the information it uses
in assigning a credit rating is of sufficient quality and from sources
Moody's considers to be reliable including, when appropriate,
independent third-party sources. However, Moody's
is not an auditor and cannot in every instance independently verify or
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Please see ratings tab on the issuer/entity page on Moodys.com
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Frankfurt am Main
Arif Bekiroglu
Asst Vice President - Analyst
Financial Institutions Group
Moody's Deutschland GmbH
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Frankfurt am Main
Carola Schuler
MD - Banking
Financial Institutions Group
Moody's Deutschland GmbH
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Moody's Deutschland GmbH
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Moody's downgrades Bankpozitif to Ba1/Not-Prime; affirms BFSR at D (Turkey)