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Moody's downgrades Imexbank (Ukraine) to Caa2/E/B3.ua from B3/E+/Baa3.ua

June 03, 2009 | "Moody’s"

Moscow, June 02, 2009 -- Moody's Investors Service has today downgraded
Imexbank's long-term local and foreign currency deposit ratings to Caa2 from
B3. In addition, Imexbank's bank financial strength rating (BFSR) was
downgraded to E from E+ and its National Scale Rating (NSR) to B3.ua from
Baa3.ua. All ratings carry a stable outlook.

The downgrade of Imexbank's ratings is driven by the bank's default on
honouring the put option on Series-A local currency bonds. The total amount
of bonds outstanding under Series-A and Series-B is UAH45 million
(US$5.8 million).

Moody's notes that as of the date of this rating action, Imexbank made an
offer to restructure the obligations with those bondholders who intended to
execute the put option. The bank is negotiating prolongation of all claims
at least for three months, while the restructuring terms do not envisage any
increase in the interest rates. However, the bank has Series-B local bonds
outstanding which also have a put-option due in November 2009 and Moody's
believes there is a high probability that respective claims will be
restructured. These considerations and Moody's expectations regarding the
level of possible losses to the bank's creditors are captured in the Caa2
rating currently assigned to the bank.

"This default was mainly the result of the recent weakening of the bank's
liquidity position caused by the deposit outflow experienced by Imexbank, in
common with many other Ukrainian banks. As such, the bank became more
dependent on funding from National Bank of Ukraine (NBU) -- the country
regulator and liquidity support provider to the system. Under the terms of
deposits placed by the NBU, the central bank recommends that Imexbank pays
all obligations only on final contractual maturities in order to avoid any
privileged transactions with insiders. As such, the bank treated the put
option as early repayment of debt and decided against redeeming the local
bonds," says Elena Redko, a Moscow-based Moody's Analyst and the lead
analyst for Imexbank.

Due to the lack of information from Imexbank, Moody's is unable to comment
on the current level of the bank's liquidity position and therefore is
unable to accurately assess the further impact of breaching NBU's
recommendations on the bank's liquidity and creditworthiness.

The previous rating action on Imexbank was on 30 December 2008 when
Moody's changed the rating outlook to negative from stable on the
long-term global local currency or foreign currency deposit or debt
ratings of 19 Ukrainian banks, including Imexbank, reflecting the
substantial increase in credit and liquidity risk for the country's banks
arising from the steep depreciation of the Ukrainian hryvnia.

The principal methodologies used in rating Imexbank are "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 subdirectory. Other methodologies and
factors that may have been considered in the process of rating Imexbank
can also be found in the Credit Policy & Methodologies directory.

Headquartered in Odessa, Ukraine, Imexbank reported unaudited total
assets of UAH6.2 billion (US$805 billion) and net profit of UAH62 million
(US$8 million) as at 31 December 2008 in accordance with Ukrainian
Accounting Standards.

Company: Imeksbank

Full company namePublic Joint-stock commercial bank "Imeksbank"
Country of riskUkraine
IndustryBanks

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