Moody's Investors Service has downgraded the long-term debt and deposit ratings of 14 banks and confirmed the ratings of three others. The action follows the downgrade of Turkish government's debt rating to Ba1, with a stable outlook, from Baa3.
Moody's has downgraded the long-term debt and deposit ratings of 10 Turkish banks due to a combination of: 1) the weakened operating environment, which the rating agency expects will gradually exert negative pressure on the individual banks' asset quality, earnings generation and capital; 2) increased downside risks to funding and liquidity as the banks need to refinance large amounts of maturing debt in a relatively difficult global and domestic economic context; and/or 3) the reduced capacity of the government to provide support in case of need, as implied by the downgrade of the sovereign rating and/or the lowering of related rating ceilings.
The affected institutions are; Akbank, Alternatifbank, HSBC Bank (Turkey), ING Bank (Turkey), Ziraat Bankasi, Halk Bankasi, Vakiflar Bankasi, Turk Ekonomi Bankasi, Garanti Bankasi and Yapi ve Kredi Bankasi.
Moody's has also downgraded the long-term ratings of four financial institutions owing solely to the weaker capacity of the government to provide support, as implied by the downgrade of the sovereign rating. The affected banks are: Is Bankasi, Sekerbank, Turkiye Sinai Kalkinma Bankasi and the Export Credit Bank of Turkey.
Moody's has confirmed the standalone BCAs and local and foreign currency debt and local currency deposit ratings of three Turkish subsidiaries of foreign banks given their expected resilient standalone profiles despite the challenging environment, and Moody's expectation of a very high likelihood of parental support. Furthermore, the ratings of these banks do not incorporate any uplift associated to government support. The affected banks are: Burgan Bank, Denizbank and Finansbank.
Moody's has assigned a stable outlook to fifteen of the 17 banks, reflecting a combination of both Moody's expectation that these banks' standalone profiles will remain resilient at their current levels despite the difficult environment, and the stable outlook on the government debt rating or the ratings of the parental groups, which underpins Moody's support assumptions. A negative outlook was assigned to the long-term ratings of Denizbank and Sekerbank.