Limassol, August 03, 2009 -- Moody's Investors Service today placed on review for possible downgrade
the local currency deposit ratings of 11 and the national scale ratings
of three Turkish banks, within the context of its global review
of the systemic support available to banking systems, following
the global financial crisis. Moody's also affirmed the local
currency deposit ratings of four Turkish banks and the issuer rating of
one government-related institution (GRI).
Moody's also changed to stable from positive the outlook on the
standalone bank financial strength ratings (BFSRs) of three banks.
These actions reflect Moody's expectation of a deep economic contraction
in Turkey during 2009 (5.0% GDP decline) and only a slow
recovery in 2010 (1.8% GDP increase) and its recognition
that short-term pressure on financial strength currently outweighs
the likelihood of an improvement, over the medium term, in
the franchises of the affected banks.
Following these outlook changes, 14 of the 15 Turkish banks rated
by Moody's now have stable outlooks on their BFSRs. This
reflects the rating agency's expectation that the weak economic
environment will continue to exert pressure on Turkish banks' asset
quality metrics, although Moody's recognises that the banks'
overall financial strength remains robust for the time being, supported
by their strong capitalisation and profitability profiles.
REVIEW OF LOCAL CURRENCY DEPOSIT RATINGS
Under Moody's banking methodology, local currency deposit
ratings incorporate (i) banks' intrinsic financial strength,
(ii) the probability and financial strength of shareholder support and
(iii) the probability of systemic support and ability of national governments
to support banks.
Moody's believes that most governments are at least as likely,
if not more likely, to support their banking systems as they are
to service their own debts -- a view that has traditionally led to
bank ratings often benefiting from significant uplift due to systemic
support (using the local currency deposit ceiling as a proxy for the government's
ability to support banks). However, in the event of a banking
crisis becoming truly systemic and protracted, the capacity of a
country and its central bank to support the nation's banks converges
with the government's own debt capacity (see Moody's Special
Comment entitled "Financial Crisis More Closely Aligns Bank Credit
Risk and Government Ratings in Non-Aaa Countries",
published in May 2009).
Moody's will be reassessing the level of systemic support for Turkish
banks to determine whether the systemic support they receive needs to
be more closely aligned with the government's local currency bond
rating.
Factors that Moody's will consider in its assessment of systemic
support include the size of the banking system in relation to the Turkish
government's resources, the level of stress in the banking
system and the banking system's foreign currency obligations relative
to the government's own foreign exchange resources.
Government actions during past crises are indicative of the Turkish government's
high focus on supporting the nation's banks. During Turkey's
2000-01 banking crisis, the government acted purposefully
to contain the potential contagion effects of troubled institutions in
the market. However, deposits denominated in the local currency
of highly supported banks are now rated as high as A3, six notches
above the Ba3 debt rating (local currency) of the government.
Moody's expects that the ratings of highly rated Turkish banks could
drop by as much as three notches following its review. The greatest
impact is likely to be on those banks with (i) moderate or low intrinsic
financial strength and (ii) whose local currency deposit ratings incorporate
a very high probability of systemic support. A high probability
of support from a highly rated parent could mitigate the impact of any
possible downward revision of the rating.
REVIEW OF NATIONAL SCALE RATINGS
Not all banks have been assigned national scale ratings. National
scale ratings, which address the relative credit risk within a country,
are derived from local currency deposit ratings. As such,
where banks have already been assigned national scale ratings, and
where their local currency deposit ratings have been placed on review
for possible downgrade, we have similarly placed their national
scale ratings on review for possible downgrade.
LIST OF RATING ACTIONS
The following rating actions were taken:
(i) Akbank AS's A3 long-term local currency deposit rating
was placed on review for possible downgrade. Its other ratings
were unaffected;
(ii) Anadolubank's Ba1 long-term local currency deposit rating
was placed on review for possible downgrade. Its other ratings
were unaffected;
(iii) Asya Katilim Bankasi AS's Ba1 long-term local currency
deposit rating and A1.tr/TR-1 national scale ratings were
placed on review for possible downgrade. Its other ratings were
unaffected;
(iv) Bankpozitif's Baa3/Prime-3 local currency deposit ratings
were affirmed with a stable outlook. Its other ratings were unaffected
(v) Denizbank's Baa1 long-term local currency deposit rating
was placed on review for possible downgrade. Its other ratings
were unaffected;
(vi) Eurobank Tekfen's Ba1/Not Prime local currency deposit ratings
were affirmed with a stable outlook. Its other ratings were unaffected;
(vii) Finansbank's A3/Prime-2 local currency deposit ratings
were affirmed. Its other ratings were unaffected;
(viii) HSBC Bank AS's A3/Prime-2 local currency deposit ratings
were affirmed with a stable outlook. Its other ratings were unaffected;
(ix) T.C. Ziraat Bankasi's Baa1/Prime-2 local
currency deposit ratings were placed on review for possible downgrade.
Its other ratings were unaffected;
(x) Turk Ekonomi Bankasi's Baa1 long-term local currency
deposit rating was placed on review for possible downgrade. The
outlook on the bank's D+ BFSR was changed to stable from positive;
(xi) Turkiye Garanti Bankasi's A3 long-term local currency
deposit rating and Aaa.tr long-term national scale rating
were placed on review for possible downgrade. Its other ratings
were unaffected;
(xii) Turkiye Is Bankasi's A3/Prime-2 local currency deposit
ratings were placed on review for possible downgrade. The outlook
on the bank's D+ BFSR was changed to stable from positive;
(xiii) Turkiye Sinai Kalkinma Bankasi's Baa1/Prime-2 local
currency deposit ratings were placed on review for possible downgrade.
Its other ratings were unaffected;
(xiv) Turkiye Vakiflar Bankasi's Baa1/Prime-2 local currency
deposit ratings were placed on review for possible downgrade. Its
other ratings were unaffected;
(xv) Yapi ve Kredi Bankasi's A3 long-term local currency
deposit rating and Aaa.tr long-term national scale rating
were placed on review for possible downgrade. The outlook on the
bank's D+ BFSR was changed to stable from positive;
(xvi) Export Credit Bank of Turkey's Ba1 issuer rating was affirmed
with a stable outlook;
PREVIOUS RATING ACTIONS AND PRINCIPAL METHODOLOGIES
The last rating action on Akbank AS was on 24 April 2007 when its BFSR
was upgraded to C- from D+.
The last rating action on Anadolubank was on 26 August 2008 when the outlook
on its D BFSR and Ba1/NP local currency deposit ratings was changed to
positive from stable.
The last rating action on Asya Katilim Bankasi AS was on 10 August 2007
when it was assigned first-time ratings. The bank was assigned
a D BFSR, Ba1/Not Prime local currency deposit ratings and B1/Not
Prime foreign currency deposit ratings, as well as A1.tr
long-term and TR-1 short-term Turkish National Scale
Ratings. All ratings carried a stable outlook.
The last rating action on Bankpozitif was on 24 April 2008 when it was
assigned first-time ratings. The bank was assigned a D BFSR,
Baa3/Prime-3 local currency deposit ratings and B1/Not Prime foreign
currency deposit ratings. All ratings carried a stable outlook.
The last rating action on Denizbank was on 1 October 2008 when its local
currency long-term deposit and senior unsecured debt ratings were
downgraded to Baa1 from A3; all its other ratings were affirmed.
The last rating action on Eurobank Tekfen was on 24 April 2007 when its
BFSR was upgraded to D- from E+. Local currency deposit
ratings of Ba1/Not Prime were also assigned.
The last rating action on Finansbank was on 24 April 2007 when its BFSR
was upgraded to C- from D+.
The last rating action on HSBC Bank AS was on 24 April 2007 when its BFSR
was upgraded to C- from D+.
The last rating action on T.C. Ziraat Bankasi was on 26
August 2008 when its BFSR was upgraded to D+ from D.
The last rating action on Turk Ekonomi Bankasi was on 25 May 2007 when
it was assigned Baa1/Prime-2 local currency deposit ratings.
The outlook on the Baa1 long-term local currency deposit rating
was positive.
The last rating action on Turkiye Garanti Bankasi was on 24 April 2007
when its BFSR was upgraded to C- from D+.
The last rating action on Turkiye Is Bankasi was on 10 September 2008
when the outlook on its D+ BFSR was changed to positive from stable.
The last rating action on Turkiye Sinai Kalkinma Bankasi was on 24 April
2007 when local currency deposit ratings of Baa1/Prime-2 were assigned.
The last rating action for Turkiye Vakiflar Bankasi was on 24 April 2007
when its BFSR was upgraded to D+ from D-.
The last rating action for Yapi ve Kredi Bankasi was on 10 September 2008
when the outlook on its D+ BFSR was changed to positive from stable.
The last rating action on Export Credit Bank of Turkey was on 23 August
2006 when its Ba1 issuer rating was affirmed.
The principal methodologies used in rating the Turkish banks are the "Bank
Financial Strength Ratings: Global Methodology" and "Incorporation
of Joint-Default Analysis into Moody's Bank Ratings: A Refined
Methodology", which can be found at www.moodys.com
in the Credit Policy & Methodologies directory, in the Ratings
Methodologies sub-directory. Other methodologies and factors
that may have been considered in the process of rating the Turkish banking
system can also be found in the Credit Policy & Methodologies directory.
T.C Ziraat Bankasi, Turkiye Vakiflar Bankasi and Export Credit
Bank of Turkey are headquartered in Ankara, Turkey. All the
other banks are headquartered in Istanbul, Turkey.
Akbank AS had total assets of TRY92.7 billion (US$61.0
billion) under IFRS at the end of December 2008.
Anadolubank had total assets of TRY3.8 billion (US$2.5
billion) under IFRS at the end of December 2008.
Asya Katilim Bankasi AS had total assets of TRY8.1 billion (US$5.3
billion) under IFRS at the end of December 2008.
Bankpozitif had total assets of TRY1.8 billion (US$1.2
billion) under IFRS at the end of December 2008.
Denizbank had total assets of TRY24.2 billion (US$15.9
billion) under BRSA at the end of December 2008.
Eurobank Tekfen had total assets of TRY3.6 billion (US$2.4
billion) under BRSA at the end of December 2008.
Finansbank had total assets of TRY30.1 billion (US$19.9
billion) under BRSA at the end of December 2008.
HSBC Bank AS had total assets of TRY14.6 billion (US$9.6
billion) under IFRS at the end of December 2008.
T.C. Ziraat Bankasi had total assets of TRY104.4
billion (US$77.6 billion) under BRSA at the end of December
2008.
Turk Ekonomi Bankasi had total assets of TRY17.0 billion (US$11.2
billion) under IFRS at the end of December 2008.
Turkiye Garanti Bankasi had total assets of TRY98.2 billion (US$69.7
billion) under IFRS at the end of December 2008.
Turkiye Is Bankasi had total assets of TRY97.5 billion (US$63.4
billion) under IFRS at the end of December 2008.
Turkiye Sinai Kalkinma Bankasi had total assets of TRY6.3 billion
(US$4.2 billion) under IFRS at the end of December 2008.
Turkiye Vakiflar Bankasi had total assets of TRY54.6 billion (US$35.9
billion) under BRSA at the end of December 2008.
Yapi ve Kredi Bankasi had total assets of TRY69.9 billion (US$46.0
billion) under IFRS at the end of December 2008.
Export Credit Bank of Turkey had total assets of TRY4.9 billion
(US$3.2 billion) under IFRS at the end of December 2008.
Limassol
Mardig Haladjian
General Manager
Financial Institutions Group
Moody's Investors Service Cyprus Limited
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454
Limassol
George Chrysaphinis
Vice President - Senior Analyst
Financial Institutions Group
Moody's Investors Service Cyprus Limited
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454
Moody's reviews Turkish banks' ratings
