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Fitch Withdraws VTB Bank (Armenia)'s Ratings

August 16, 2010 | Fitch Ratings

Fitch Ratings-London/Moscow-13 August 2010: Fitch Ratings has affirmed and withdrawn the ratings of VTB Bank (Armenia) (VTBA), including its Long-term Issuer Default ratings (IDR) at 'BB'. A full list of the rating actions is provided at the end of this commentary.

The IDRs of VTBA reflect Fitch's view of the moderate probability of support being forthcoming, if required, from its owner, Russia's JSC VTB Bank (VTB; 'BBB'/Stable/'F3'). This is based on VTB's 100% ownership, the strategic importance of CIS markets for VTB and the small size of VTBA relative to its parent. However, the extent to which this support can be factored into the ratings is limited by Armenian transfer and convertibility risks, as captured in the 'BB' Country Ceiling.

The Individual Rating of 'D/E' reflects the high proportion of foreign currency loans, operational risks associated with its branch network, the still significant dependence on the parent for funding and liquidity support and a difficult, albeit improving, operating environment. However, it also takes into account the bank's solid capitalisation, the recent stabilisation of asset quality metrics and the significant domestic franchise.

VTBA held 10% of sector loans and 7% of retail deposits at end-Q110.

Fitch will no longer provide ratings or analytical coverage of VTBA.

The rating actions are as follows:

Bank VTB Bank (Armenia) CJSC

Long-term foreign and local currency IDRs: affirmed at 'BB' with Stable Outlook; withdrawn
Short-term foreign and local currency IDRs: affirmed at 'B'; withdrawn
Individual Rating: affirmed at 'D/E'; withdrawn
Support Rating: affirmed at '3'; withdrawn

Company: VTB (Armenia)

Full company nameAO "VTB Bank" (Armenia)
Country of riskArmenia
IndustryBanks

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