Fitch cuts Khan Bank, XacBank to B

Fitch Ratings said it downgraded Khan Bank and XacBank LLC's long-term foreign- and local-currency issuer default ratings to B from B+.

The outlook remains negative.

The downgrade follows the recent downgrade of the Mongolian sovereign's issuer default rating to B with negative outlook from B+.

There is likely to be continued downward pressure on the exchange rate, which has depreciated by 11% against the dollar in the last two months of 2008, Fitch said, and by another 7% since year end.

Fitch suggested that the capacity of the central bank to manage the exchange rate is diminished, as is the ability of the banking system to absorb further exchange rate depreciations.

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