Moody's Investors Service has downgraded the financial strength rating (FSR) of Turkiye Vakiflar Bankasi (VakifBank) to E+ stable from D.
The downgrade follows a review that stems from the recent failure to privatize the bank within the timeframe agreed between the government of Turkey and the World Bank and from Moody's expectations, now confirmed, that asset quality has deteriorated substantially relative to VakifBank's equity base.
Moody's stated that VakifBank's low level of tangible equity remains highly sensitive to large exposures and interest rate risks. In addition, Moody's noted that the bank is challenged to overcome capital raising constraints while structural impediments complicate privatization efforts.
Moody's remarked that the recent Tier II capital injection by the BDDK, the Turkish bank regulatory authority, permits the bank to meet regulatory minimum capitalization requirements.
In addition, Moody's' commented that privatization could unlock hidden potential and enhance the FSR, however, the rating agency also asserted that the time value of this real option is significantly lower due to the difficulties still being encountered in the privatization process.
Turkiye Vakiflar Bankasi is headquartered in Ankara. The bank reported assets of $7.65 billion for 2001. — (menareport.com)
© 2002 Mena Report (www.menareport.com)
