Bangkok--6 Feb--Moody's Investors Service
Moody's Investors Service has put on review for possible downgrade various ratings of three Mongolian banks: Khan Bank, the Trade and Development Bank of Mongolia (TDB) and XacBank.
The ratings affected include the long-term local/foreign currency ratings of all three banks and short-term local currency deposit rating of Khan Bank, but their bank financial strength ratings (BFSR) and the outlooks or reviews for their BFSRs are unaffected. See below for the complete list of ratings affected.
"This review for possible downgrade follows Moody's recent decision to review for possible downgrade Mongolia's sovereign ratings, namely, its
Baa2 local currency deposit ceiling, B2 foreign currency deposit ceiling,
Ba2 foreign currency bond ceiling, and B1 local/foreign currency ratings for government bonds," says Cherry Huang, a Moody's VP/Senior Analyst.
See Moody's press release of February 5, 2009, for more discussion of sovereign issues.
Separately, we will also review whether the foreign currency debt ratings of the individual banks should be better aligned, or even capped, by Mongolia's foreign currency government bond rating (current and future).
"This additional review is being conducted because of our concern that deterioration in Mongolia's external payments position may limit the government's ability to provide foreign currency liquidity support to the country's banks," says Huang.
This part of the review will focus on the size of banks' own foreign currency resources and whether they are sufficient to reduce to an immaterial level their dependence on the government for foreign currency denominated assistance. All three banks have a relatively high dependence on foreign currency funding, relying on it for amounts ranging from 29% to 50% of total assets as of Dec. 2008. The conclusion of the three banks' rating review may result in foreign currency debt or medium term note ratings that are lower than the sovereign foreign currency bond ceiling.
Moody's last rating actions on Khan Bank and XacBank were taken on December 12, 2008. At this time, the outlook for the BFSR and local currency deposit and debt ratings of Khan Bank were changed to negative.
And the same ratings of XacBank were placed on review for possible downgrade.
The last rating action on TDB was taken on June 5, 2008 when the senior and subordinated debt ratings of its Euro Medium-Term Notes Program were affirmed and its lower-tier II subordinated debt rating was assigned.
The principal methodologies used in rating these issuers are Moody's Bank Financial Strength Rating Methodology and Joint Default Analysis, 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 these issuers can also be found in the Credit Policy & Methodologies directory.
All three banks are headquartered in Ulaanbaatar, Mongolia. As of December 31, 2008, Khan bank reported unaudited assets of MNT 841.8 billion (approximately USD 656 million), TDB MNT 668.7 billion (USD 521 million) and XacBank MNT 208.4 billion (USD 162 million).
Below is a list of the ratings for each of the three banks with their review status described in parentheses:
Khan Bank:
Bank Financial Strength - D with negative outlook
Senior Unsecured MTN (Foreign) - Ba2 (Review for possible downgrade)
Senior Unsecured MTN (Domestic) - Baa3 (Review for possible downgrade)
LT Bank Deposits (Foreign) - B2 (Review for possible downgrade)
LT Bank Deposits (Domestic) - Baa3 (Review for possible downgrade)
LT Issuer Rating (Foreign) - Ba2 (Review for possible downgrade)
LT Issuer Rating (Domestic) - Baa3 (Review for possible downgrade)
Subordinate MTN (Foreign) - Ba2 (Review for possible downgrade)
Subordinate MTN (Domestic) - Ba1 (Review for possible downgrade)
ST Bank Deposits (Foreign) - NP
ST Bank Deposits (Domestic) - P-3 (Review for possible downgrade)
Trade and Development Bank of Mongolia:
Bank Financial Strength - D- with stable outlook
Senior Unsecured (Foreign) - Ba2 (Review for possible downgrade)
Senior Unsecured MTN (Foreign) - Ba2 (Review for possible downgrade)
LT Bank Deposits (Foreign) - B2 (Review for possible downgrade)
LT Bank Deposits (Domestic) - Ba1 (Review for possible downgrade)
LT Issuer Rating (Foreign) - Ba2 (Review for possible downgrade)
LT Issuer Rating (Domestic) - Ba1 (Review for possible downgrade)
Subordinate MTN (Foreign) - Ba2 (Review for possible downgrade)
Junior Subordinate (Foreign) - Ba2 (Review for possible downgrade)
ST Bank Deposits (Foreign and Domestic) - NP
ST Issuer Rating (Foreign and Domestic) - NP
Other Short Term (Foreign) - NP
XacBank:
Bank Financial Strength - D (Review for possible downgrade from Dec 12,
2008)
LT Bank Deposits (Foreign) - B2 (Review for possible downgrade)
LT Bank Deposits (Domestic) - Ba1 (Review for possible downgrade from Dec 12, 2008)
LT Issuer Rating (Foreign) - Ba2 (Review for possible downgrade)
LT Issuer Rating (Domestic) - Ba1 (Review for possible downgrade from Dec 12, 2008)
ST Bank Deposits (Foreign and Domestic) - NP
ST Issuer Rating (Foreign and Domestic) - NP
Taipei
Cherry Huang, CFA
Vice President - Senior Analyst
Financial Institutions Group
Moody's Taiwan Corporation
Telephone: 886-2-2757-7125
Facsimile: 886-2-2757-7129
Singapore
Karolyn C. Seet
Asst Vice President - Analyst
Financial Institutions Group
Moody's Singapore Pte Ltd.
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