S&P: Kapitalbank to negative

S&P said it revised the outlook on Kapital Bank to negative from stable.

The agency also said it affirmed the B long-term and B short-term counterparty credit ratings.

The outlook revision reflects concerns that the bank might face difficulties to comply with tightening local capital adequacy standards over the next 12- to 18-months, S&P said.

The agency said it thinks that during the transition to Basel III, Kapital Bank will likely continue operating with local capital adequacy ratio (CAR) of less than 100 basis points above the minimum requirement.

According to the local regulation, the bank's CAR was 13.3% as of April 30, 2017, S&P said, while the minimal regulatory requirement was 12.5% at the same date.

The agency said it understands that minimum capital requirement will increase to 13.5% in 2018 and 14.5% in 2019.

If the bank continues its strong lending growth at higher than 20% per year without securing additional capital to support this growth, it will likely face a challenge in meeting the increased capital requirements, which might lead to regulatory action, S&P said.

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