TODAY’S – Moody’s maintains long-term Bank Asya rating

Moody’s maintains long-term Bank Asya ratingCredit ratings agency Moodyand#39s has confirmed the long-term deposit rating of Bank Asya, while downgrading its standalone baseline credit assessment (BCA), according to a press release from Moodyand#39s on Monday.The Caa1 long-term rating was confirmed while the Islamic lenderand#39s BCA was downgraded from Caa3 to CaandldquoThe confirmation of the long-term deposit ratings reflects Moodyand#39s view that Bank Asyaand#39s strong capitalization — a Tier 1 ratio of 14.

2% as at Q3 2014 — and sizeable liquid-assets, limit the likelihood of depositors having to absorb losses in the event that the bank were to default. Moodyand#39s also notes that the bankand#39s shareholdersand#39 meeting, in November 2014, approved a capital increase of TL 225 million that would, if completed, further improve the bankand#39s risk-absorption capacity.

The bank expects this to be finalized by end-January 2015,andrdquo said Moodyand#39s in the press release.The government has waged a campaign to force Bank Asya out of business due to its ties with the Islamic scholar Fethullah Gulen-inspired Hizmet movement.

Following the severe corruption allegations against key government figures that surfaced on Dec. 17 and 25, 2013, the ruling Justice and Development Party (AK Party)onvinced friendly firms as well as public institutions to withdraw deposits from the bank in order to damage its financial integrity.

Throughout the year the government has taken a variety of strikes at the lender, and at one point President Recep Tayyip ErdoIan claimed that the bank had andldquoalready sunk.andrdquoMoodyand#39s said that while a short-term upgrade is not likely to be made, in the event of an acquisition or merger, the bankand#39s long-term deposit rating could be hiked.

andldquoThis could, depending on the acquiring entityand#39s credit strength and extent of potential support for Bank Asya, exert upward pressure on the deposit ratings. Sustained trends in improving financial fundamentals would also exert upward pressure on current ratings,andrdquo said Moodyand#39s.

SOURCE: Today’s Zaman