Fitch places certain ratings of 19 emerging market EMEA banks under criteria observation

Fitch Ratings - London: Fitch Ratings has placed certain ratings of 19 emerging market banks in Europe, Middle East and Africa Under Criteria Observation (UCO). The rating actions follow the publication on 28 February of updated Bank Rating Criteria, which in particular included changes to the way Fitch: - notches senior and junior debt ratings from their Issuer Default Rating (IDR) or Viability Rating (VR) anchors; - potentially notches a bank's IDR up from its VR; and

- derives a subsidiary bank's IDR from its parent's ratings.

The ratings placed UCO are listed at the end of this rating action commentary and will be reviewed and resolved as soon as practical and in any case within six months.

KEY RATING DRIVERS

Fitch has placed the IDRs, senior debt and subordinated debt ratings listed at the end of this rating action commentary UCO. The rating actions reflect the possibility that these ratings will be upgraded or downgraded as a result of the publication of the new Bank Rating Criteria, as outlined in more detail in the Rating Sensitivities section of this rating action commentary.

The IDRs of Credit Bank of Moscow and Fibabanka Anonim Sireti are notched up from their VR due to buffers of qualifying junior debt.

The IDRs of ING Bank Slaski S.A. and United Bulgarian Bank AD are notched down from their respective parent's VR. Their parents' IDRs are one notch above their VRs given significant and sustainable buffers of junior debt.

The senior debt ratings of all banks, where assigned, are equalised with the banks' IDRs.

The subordinated debt ratings of all banks, where assigned, are notched down once from anchor ratings to reflect below average recovery expectations. The anchor ratings are banks' VRs, with the exceptions of ADCB Finance (Cayman) and SB Capital S.A., whose subordinated debt ratings are notched down once from the support-driven IDRs of Abu Dhabi Commercial Bank and Sberbank of Russia, respectively.

RATING SENSITIVITIES

Potential Upgrades of IDRs

We have placed the Long-Term IDRs of the following issuers UCO. These issuers are foreign subsidiaries of banks and their IDRs are one notch below their respective parents' VRs. Under the new criteria, if we conclude that subsidiary senior creditors would benefit from parent junior debt buffers, then the parent's IDR, rather than VR, should therefore be used as the anchor ratings for the subsidiary's IDR. This could result in a one-notch upgrade of ING Bank Slaski's Long-Term IDR, and a revision of the Outlook on United Bulgarian Bank's Long-Term IDR to Positive from Stable. The latter rating would be constrained by Bulgaria's Country Ceiling.

ING Bank Slaski S.A.

United Bulgarian Bank AD

We have placed the following Short-Term IDR UCO. This is because it could be upgraded if we upgrade the bank's Long-Term IDR.

ING Bank Slaski S.A.

Potential Downgrades of Long-Term IDRs and Senior Debt Ratings

We have placed the Long-Term IDRs and senior debt ratings of the following issuers UCO. These ratings are currently notched up from the banks' VRs due to large buffers of qualifying junior debt (QJD). However, under the new criteria, these ratings could be downgraded to the level of the banks' VRs if Fitch does not expect that the QJD buffers will be clearly and sustainably above 10% of risk-weighted assets. Fitch estimates that the QJD buffers at both banks are currently marginally below 10%.

Credit Bank of Moscow

CBOM Finance PLC (senior debt on UCO; no IDR assigned)

Fibabanka Anonim Sirketi

We have placed the long-term rating assigned to the USD4 billion debt programme of the following issuer UCO because the debt is issued by a holding company and could be downgraded under the new criteria to reflect below average recovery prospects if buffers of junior debt are likely to be thin.

Standard Bank Group Limited

Potential Downgrades of Subordinated Debt Ratings

We have placed the subordinated (Tier 2) debt of the following issuers UCO because these ratings could be downgraded to reflect the switch to a baseline notching of two notches for loss severity from the anchor rating under the new criteria (from one notch under the previous criteria) unless conditions under the new criteria for one notch prevail.

ADCB Finance (Cayman) Limited

Absa Group Limited

FirstRand Bank Limited

Standard Bank Group Limited

AKBANK T.A.S.

Alfa Bond Issuance Public Limited Company

CBOM Finance PLC

Fibabanka Anonim Sirketi

Odea Bank A.S.

Sekerbank T.A.S.

SovCom Capital DAC

Turkiye Is Bankasi A.S.

Yapi ve Kredi Bankasi A.S.

Turkiye Vakiflar Bankasi T.A.O.

Turkiye Sinai Kalkinma Bankasi A.S.

SB Capital S.A.

PUBLIC RATINGS WITH CREDIT LINKAGE TO OTHER RATINGS

The rating assigned to ADCB Finance (Cayman) 's Tier 2 debt is notched down from Abu Dhabi Commercial Bank's IDRs, which in turn reflects an extremely high probability of support available to the bank from the UAE authorities.

The rating assigned to SovCom Capital's Tier 2 debt is linked to PJSC Sovcombank's VR.

The rating assigned to Alfa Bond Issuance's Tier 2 debt is linked to the VR of Joint Stock Company Alfa-Bank.

The rating assigned to CBOM Finance's Tier 2 debt is linked to the VR of Credit Bank of Moscow, and the rating assigned to CBOM Finance's senior debt is linked to the Long-Term IDR of Credit Bank of Moscow.

The rating assigned to SB Capital's Tier 2 debt is linked to the Long-Term IDR of Sberbank of Russia ING Bank Slaski's IDRs are currently linked to ING Bank N.V.'s VR.

United Bulgarian Bank AD's IDRs are currently linked to KBC Bank's VR.

-Ends-

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© Press Release 2020