Fitch cuts Alliance Bank, BTA Bank to F

Fitch Ratings said it downgraded the individual rating of Alliance Bank to F from D/E and affirmed its ratings, including its BB- long-term foreign-currency issuer default rating, senior unsecured debt and support rating floor; B short-term foreign-currency issuer default rating; and 3 support rating.

The agency also downgraded the individual rating of BTA Bank to F from D and affirmed its ratings, including its BB long-term foreign- and local-currency issuer default ratings, senior unsecured debt and support rating floor; B short-term foreign- and local-currency issuer default ratings; 3 support rating; and B- $400 million tier 1 perpetual preferred securities.

The agency also affirmed the ratings of BTA Bank domestic subsidiary Temirbank, including its BB- long-term foreign-currency issuer default rating, senior unsecured debt and support rating floor; B short-term foreign-currency issuer default rating; D/E individual rating; and 3 support rating.

BTA Bank's perpetual preferreds were placed on Rating Watch negative. For the remaining ratings, the outlook is negative.

The rating actions follow the recent announcement that the Kazakhstan government, through the National Welfare Fund Samruk-Kazyna, is acquiring a 78.14% stake in BTA Bank and is considering an offer from Seimar Alliance Financial Corp. to purchase a 76% stake in Alliance Bank for the symbolic amount of 100 tenge.

In Fitch's view, these events confirm its long-stated position that the Kazakh authorities would be highly likely to support, in case of need, banks that they consider to be systemically important.

The F individual ratings reflect Fitch's opinion that the banks have failed and would have defaulted in the short to medium term without the recent and potential future external support made available by the Kazakh authorities.

The Rating Watch on BTA Bank's perpetual preferreds reflects greater uncertainty as to whether future dividend payments will be made in light of the bank's weak standalone financial position and its dependence on support being made available by the Kazakh authorities, the agency said.

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