January 25, 2008 |
|Fitch Ratings has today upgraded Ukraine-based Ukrsotsbank's (Ukrsots) ratings to Long-term foreign currency Issuer Default (IDR) 'BB-' (BB minus) from 'B' and Support '3' from '5'. The ratings are removed from Rating Watch Positive. A Long-term local currency IDR of 'BB' has been assigned. The Long-term foreign and local currency IDRs are placed on Positive Outlook. The Short-term IDR and Individual rating are affirmed at 'B' and 'D', respectively. In addition, Ukrsots' two eurobond issues – USD100 million due 6 June 2008 and USD400m due 22 February 2010 - have been upgraded to 'BB-' (BB minus) from 'B', and the Recovery ratings of 'RR4' on these have been withdrawn. Furthermore, in line with its policy for banks whose ratings are driven by institutional support, Fitch has withdrawn Ukrsots' sovereign-derived Support Rating Floor of 'B- ' (B minus). |
These rating actions follow the recent completion of the acquisition of a 94.2% stake in Ukrsots by Italy-based UniCredit (rated 'A+'/Outlook Positive) through its Vienna subsidiary, Bank Austria Creditanstalt AG.
The upgrade reflects Fitch's view of UniCredit’s greater ability - as indicated by its Long-term IDR - compared with that of Ukrsots' previous majority owners, to provide the bank with support, in case of need. However, Ukrsots' Long-term foreign currency IDR is constrained by Ukraine's 'BB-' (BB minus) Country Ceiling, while the Long-term local currency IDR also takes into account country risks.
The Outlooks on Ukrsots' Long-term IDRs reflect the Positive Outlook on the sovereign Long-term IDRs ('BB-' (BB minus)). Should Ukraine be upgraded, Ukrsots' Long-term foreign and local currency IDRs will likely follow suit.
The Individual rating of Ukrsots reflects existing pressure on capitalisation and the bank’s potentially vulnerable liquidity position, although the new shareholder should help to address these issues. The rating also acknowledges the bank’s well-developed and expanding customer franchise, healthy bottom-line performance and good asset quality to date, as well as ongoing funding diversification.
At end-2007, Ukrsots was the fourth-largest bank in Ukraine, with over USD6bn in assets. Ukrsots services a million-plus customer-base through the country’s seventh-largest nationwide network, comprising 508 branches as at end-2007.
|Full company name||Ukrsotsbank PJSC|
|Country of risk||Ukraine|
|Country of registration||Ukraine|