S&P: Banks in Kazakhstan, Russia, Ukraine hold ground

Standard & Poor's said in a report that banks in Kazakhstan, Russia and Ukraine are holding their ground as they battle the current global liquidity squeeze.

But tightening liquidity in those banking systems has put the spotlight on the banks' structural liquidity and funding weaknesses, which are a more lasting concern, S&P said.

"We expect most KR&U banks to weather adequately these tough funding and liquidity conditions, which we see persisting through 2008 and even possibly into 2009," said S&P credit analyst Ekaterina Trofimova.

"Most KR&U banks should also be able to meet near-term foreign debt repayments. The longer the credit squeeze stretches on, however, the higher the pressure is on liquidity and other fundamentals of KR&U banks, particularly because of reduced long-term funding availability."

According to the report, the impact on Russian and Ukrainian banks has not been that pronounced so far, while Kazakh banks have felt the crunch more because of their over-reliance on foreign borrowings.

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