MOODY’S DOWNGRADES TWO ARMENIAN BANKS’ RATINGS

Financial Mirror
Oct 22 2009
Cyprus

Moody’s Investors Service downgraded Thursday the long-term global
local currency (GLC) deposit ratings of two Armenian banks —
ACBA-Credit Agricole and Ardshininvestbank — to Ba2 from Ba1. The
outlook on all ratings of both banks is now stable.

Like most governments, the Armenian authorities are at least as (if not
more) likely to support their banking system as they are to service
their own debt, a view that has traditionally led to bank ratings
benefiting from significant uplift. However, Moody’s believes it is
more appropriate to use the government’s debt rating as a reference
rating to measure its ability to provide public support to banks,
instead of the local currency deposit ceiling, as previously.

Consequently, Armenia’s systemic support indicator is Ba1, one notch
above the government’s Ba2 local currency bond rating. As a result,
their GLC deposit ratings now receive a one-notch uplift from their
respective Ba3 baseline credit assessments, the measure of their
intrinsic or standalone financial strength.

The bank financial strength ratings (BFSRs) of ACBA-Credit Agricole
and Ardshininvestbank are unaffected as Moody’s believes that their
adequate capitalisation enables them to absorb a level of stress in
line with current loss assumptions.

Headquartered in Yerevan, ACBA-Credit Agricole and Ardshininvestbank
had total assets of AMD 140 bln (USD 391 mln) and AMD 115 bln (USD
320 mln), respectively, as at the end of June 2009.