S&P lowers 3 Ukraine banks

Standard & Poor's said it lowered the long-term counterparty credit ratings on three Ukraine-based banks - PrivatBank, Alfa-Bank Ukraine and PJSC Kredobank - to CCC+ from B-.

The outlooks on the three banks are negative.

The agency also said it affirmed the C short-term counterparty credit ratings on these banks.

S&P also lowered the Ukraine national scale ratings on Kredobank and Alfa-Bank Ukraine to uaBB- from uaBBB-.

The downgrades follow a similar action on Ukraine, the agency said.

The sovereign's creditworthiness is viewed by S&P as the major risk factor for Ukrainian banks because of their high operational, funding and asset exposure to the domestic economy.

The escalation of the political turmoil in Ukraine makes the expected financial support package from Russia less certain if the government of President Yanukovych falls, the agency said.

Ukraine is currently vulnerable to, and dependent on, favorable political and economic developments to service its debt obligations, S&P said.

This political instability, coupled with very weak economic prospects, increases risks for the banking sector, which is by nature confidence-sensitive, the agency said.

But, Alfa-Bank Ukraine and Kredobank are subsidiaries of large foreign groups, whose creditworthiness is substantially superior to that of Ukraine, S&P added.

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