Moody’s drops three Mongolian banks

Moody's Investors Service said it downgraded the local currency long-term deposit ratings for Khan Bank LLC, XacBank LLC and Trade and Development Bank of Mongolia LLC to B2 from B1.

At the same time, the agency downgraded the foreign currency long-term senior unsecured debt ratings for Trade and Development Bank to B3 from B1.

The outlooks are negative.

The action follows the July 17 downgrade of Mongolia's sovereign ratings to B2 from B1.

Moody’s said the rating action on the three banks' ratings is based on the consideration that the creditworthiness of the Mongolian banking system is highly correlated to the sovereign. The sovereign downgrade was driven by its strained external liquidity position, as reflected by a sharp loss in foreign-exchange reserves.

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