Moody’s acts on 17 Turkish financials

Moody's Investors Service said it concluded its review for downgrade of 17 Turkish financial institutions by downgrading the long-term debt and deposit ratings of 14 entities and confirming the ratings of three financial institutions.

The action follows the downgrade of Turkish government's debt rating to Ba1 with a stable outlook from Baa3 on Sept. 23.

Moody's downgraded the long-term debt and deposit ratings of 10 Turkish financial institutions due to a combination of: (a) The weakened operating environment, which the rating agency expects will gradually exert negative pressure on the individual banks' asset quality, earnings generation and capital; (b) increased downside risks to funding and liquidity as the banks need to refinance large amounts of maturing debt in a relatively difficult global and domestic economic context; and/or (c) the reduced capacity of the government to provide support in case of need, as implied by the downgrade of the sovereign rating and/or the lowering of related rating ceilings. The affected institutions are: Akbank TAS, Alternatifbank AS, HSBC Bank AS (Turkey), ING Bank AS (Turkey), T.C. Ziraat Bankasi AS, Turkiye Halk Bankasi AS, Turkiye Vakiflar Bankasi TAO, Turk Ekonomi Bankasi AS, Turkiye Garanti Bankasi AS and Yapi ve Kredi Bankasi AS.

The agency also downgraded the long-term ratings of four financial institutions (three banks and one government-related institution) owing solely to the weaker capacity of the government to provide support, as implied by the downgrade of the sovereign rating. At the same time, the standalone baseline credit assessments of the three banks were confirmed at existing levels given their expected resilience to the weakened operating environment. The affected banks are: Turkiye IS Bankasi AS, Sekerbank TAS and Turkiye Sinai Kalkinma Bankasi AS; and the GRI is Export Credit Bank of Turkey AS.

Moody's confirmed the standalone BCAs and local and foreign currency debt and local currency deposit ratings of three Turkish subsidiaries of foreign banks given their expected resilient standalone profiles despite the challenging environment, and the expectation of a very high likelihood of parental support. Furthermore, the ratings of these banks do not incorporate any uplift associated to government support, Moody’s said. The affected banks are: Burgan Bank AS, Denizbank AS and Finansbank AS.

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