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Kazakhstan's Bank RBK 'B-/C' Ratings Affirmed Despite License Suspension - S&P

24.07.2012, 10:21 2930

Frankfurt. July 24. Kazakhstan Today - Standard & Poor's Ratings Services said on July 23, 2012 that it had affirmed its 'B-' long-term and 'C' short-term counterparty credit ratings on Kazakhstan-based Bank RBK JSC. The outlook is stable, Kazakhstan Today reports.

According to Standard & Poor's press release, the Ratings Services also affirmed the 'kzBB-' Kazakhstan national scale rating on the bank.

The rating affirmations follow a decision by the Kazakh regulator to suspend Bank RBK's license to take new retail deposits for six months, effective July 9, 2012. They reflect the view of the S&P that the suspension will have no material negative impact on the bank's business and financial profiles.

S&P supposes that Bank RBK will be able to maintain adequate liquidity and capitalization in the event of retail deposit outflows in connection with the licence suspension. As of July 17, 2012, the bank had an "adequate" liquidity position, with Kazakhstani tenge (KZT) 21.5 billion ($140 million)in liquid assets, including corporate securities, of which KZT7.7 billion was in cash and correspondent accounts. The bank's liquid assets cover the total retail depositor base. The experts expect inflows of corporate deposits partly to compensate for any outflow of retail deposits.

Most of RBK Bank's deposits are corporate deposits (72% on June 30, 2012). In addition, the bank's shareholders have said they will inject KZT5 billion in common equity in the second half of 2012, up from an originally planned KZT1 billion.

Following a change of shareholders in November 2010, Bank RBK has been expanding aggressively with the aim of increasing its market share. The bank's assets increased to KZT71.9 billion as of June 30, 2012, from KZT5.8 billion at year-end 2010.

Bank RBK received a retail deposit licence in August 2011 and has launched a comprehensive promotional campaign offering higher deposit rates than the market average. Retail deposits reached a peak of KZT16.0 billion as of July 9, 2012. Kazakhstan's Deposit Guarantee Fund covers retail deposits of up to $35,000 per depositor in any of its member banks. Bank RBK is a member of the fund.

Bank RBK has lowered its growth targets for the second half of 2012 because of its inability to continue expanding retail deposit funding. The Ratings Service views this positively as we consider the bank's rapid growth to be a key risk factor.

The stable outlook reflects S&P's view that the bank will maintain adequate capitalization and liquidity positions over the next 12 months. It also reflects its view that the license suspension will not be extended beyond the original six months. In addition, it factors in possible moderate retail deposit outflows and a gradual deterioration of asset quality from unsustainably high levels currently.

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