Moody's may downgrade Bankas Snoras

Moody's Investors Service said it placed on review for possible downgrade AB Bankas Snoras' Ba3 long-term global local- and foreign-currency deposit ratings and D- bank financial strength rating. The Not-Prime short-term ratings were affirmed.

The rating action mainly reflects Moody's increased concerns with regard to the trend in the bank's asset quality in light of the deteriorating economic environment in Lithuania. After several years of above-trend growth, the economy appears poised to slow significantly into 2009, and a recession appears increasingly likely. The agency believes that the continuing dearth of global liquidity will have an acute impact on the country given the large current account deficit.

Bankas Snoras continues to report strong loan growth and satisfactory asset quality, the agency said. At the same time, the bank's borrower concentration risk is high, and Moody's expects the problem loan ratio to rise due to high lending growth over recent years and the slowing domestic economy.

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