Fitch Ratings anticipates default of Belarusian banks

• 22.03.2012, 11:38

Fitch Ratings agency affirmed the Long-term Issuer Default Ratings of seven Belarusian banks.

Six of them - Belarusbank, Belinvestbank, BPS-Sberbank, Belgazprombank, Belvnesheconombank and VTB Bank - have been affirmed at 'B-' with a Negative Outlook, BTA Bank at 'CCC'.

The ratings and the outlooks reflect the weaknesses in the banks' stand-alone profiles, the Belarusian operating environment and the credit profile of the Belarus sovereign. The latter affects the state's ability to support Belarusbank and Belinvestbank and raises the risk of transfer and convertibility restrictions which could constrain the ability of all banks, including those with foreign shareholders, to service their obligations.

Fitch Ratings supposes the asset quality in the Belarusian banking system is likely to continue to deteriorate in the near to medium term as a result of the severe economic and currency crisis of 2011. Furthermore, capitalisation of many banks is now tight as a result of inflation of risk-weighted assets and delays with equity injections, limiting their ability to absorb losses.