Bereke Bank Rating Downgraded

The American rating agency Fitch Ratings has revised its rating for Kazakhstan's Bereke Bank, a former subsidiary of Russia's Sberbank. The revision came after the completed deal to sell it to Qatar's Lesha Bank, Orda.kz reports.

Fitch Ratings writes that Bereke Bank's credit rating was downgraded from BB (creditworthiness level below sufficient) to B+ on sale completion with a stable outlook. Analysts believe the bank can still fulfill its financial obligations, but if the business and economic situation worsens, it could face a default risk.

The rating downgrade was due to the completion of a deal in which a Qatari investor took control of the former Russian Sberbank subsidiary.

Bereke's 'B+' IDRs are now driven by its intrinsic creditworthiness, as measured by its 'b+' VR, as Fitch believes that neither government nor shareholder support can be relied upon, and thereby incorporated into Bereke's ratings. The Stable Outlooks on Bereke's IDRs reflect Fitch's expectation that the key drivers of the bank's credit profile will remain stable over the Outlook horizon, the agency said. 

Fitch notes that Bereke Bank has become a financial institution without state ownership and with foreign capital.

Meanwhile, its share in Kazakhstan's banking sector is relatively low, 4.5% in the sectoral loans market and 3.5% in the deposits market. Without state support, Bereke solely relies on Lesha Bank, whose assets are 2.8 times lower than the Kazakh bank's.

It is unlikely that the bank's credit rating will be raised again soon.

An upgrade of Bereke's ratings would require a considerable strengthening of its business profile, core profitability and capitalisation. In particular, the ratings could be upgraded if core performance gets closer to sector averages, while the FCC ratio increases to around 15%, Fitch said.

At the beginning of the year, the agency warned that it would revise Bereke Bank's rating downwards if it were sold to the Qatari investor. 

Original Author: Nikita Drobny