Moody's: Three Mongolian banks negative

Moody's Investors Service said it changed the outlooks for three Mongolian banks to negative from stable, reflecting intensifying adverse developments in their operating environment.

The banks are Khan Bank LLC, Trade and Development Bank of Mongolia LLC and XacBank LLC.

At the same time, the agency lowered Trade and Development Bank's baseline credit assessment to b2 from b1 because of the high credit risks evident in its portfolio. On this last point, Moody's notes a high level of borrower concentration and relatively higher exposure to risky sectors, such as construction and mining.

Despite the lowering of the baseline credit assessment, Moody's affirmed Trade and Development Bank's B1 senior unsecured bond and local currency deposit ratings, incorporating one notch of systemic support, given the assessment of the systemic importance of Trade and Development Bank - as the second largest lender in terms of loans - in the Mongolia banking system.

Moody's change in the ratings outlooks to negative reflects the fact that the banks remain vulnerable to a deterioration in asset quality and high borrower concentration against the backdrop of intensifying adverse developments in the operating environment, the agency said.

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