BRAMA, Nov 14, 2005, 11:00 am ET|
Fitch Affirms Ukraine's Privatbank at Long-term 'B', Individual 'D'
Fitch Ratings-London/Moscow-14 November 2005: Fitch Ratings has today affirmed Ukraine-based CJSC Privatbank ("Privat") ratings at Long-term 'B', Short-term 'B', Individual 'D' and Support '4'. The Outlook on the Long-term rating remains Positive.
Privat's Long-term, Short-term and Support ratings reflect Fitch's view of the strong propensity of the Ukrainian authorities to provide support for the bank in case of need, based on Privat's size and importance to the banking sector. However, Fitch notes that the ratings also factor in the probable limited ability of the authorities to provide support if required, as reflected in the 'BB-(BB Minus)' Long-term sovereign rating.
The Individual rating reflects Privat's weak core profitability and capitalisation, relatively high loan concentrations and weaknesses in the operating environment. However, it also considers Privat's broad domestic franchise and quite low funding concentrations.
The Positive Outlook on Privat's Long-term rating reflects the Positive Outlook on the Long-term ratings of Ukraine. Upward pressure on the Long-term rating would result from an upgrade of the Ukraine sovereign rating. Downward pressure would result from a sovereign downgrade or a substantial reduction in Privat's market shares, suggesting a decreased propensity of the Ukrainian authorities to provide support. Significant and sustainable improvements in the bank's core earnings and capitalisation, combined with continued franchise expansion and improvements in the operating environment, could put upward pressure on the Individual rating. Downward pressure could result from a deterioration of capitalisation or a worsening of asset quality.
Privat, based in Dnepropetrovsk in south-east Ukraine, is currently the country's largest bank by assets, equity and retail deposits, with market shares of approximately 11%, 9% and 13%, respectively, at end-H105. Privat also has the largest branch network in the Ukraine. Three individuals own a combined 94% stake in the bank, with the remaining 6% belonging to management.
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