Nov 13 - Fitch Ratings has upgraded nine Turkish banks' Issuer Default
Ratings (IDRs). The banks include four state-owned banks and five banks owned by
more highly rated foreign parents. A full list of rating actions is at the end
of this rating action commentary. Fitch will separately review the Long-term
IDRs of Turkey's three largest privately-owned banks.
The rating actions follow the upgrade of the Republic of Turkey's Long-term
foreign currency and local currency IDRs (see 'Fitch Upgrades Turkey to
Investment Grade' dated 5 November 2012 at www.fitchratings.com).
RATING ACTION RATIONALE: IDRS, SUPPORT RATINGS, SENIOR DEBT
The upgrades of the four state-owned banks - T. C. Ziraat Bankasi A.S. (Ziraat),
Turkiye Halk Bankasi A.S. (Halkbank), Turkiye Vakiflar Bankasi T.A.O.
(Vakifbank) and Turkiye Kalkinma Bankasi A.S. (TKB) -
reflect the improved ability of the Turkish sovereign to provide support to
these banks in case of need.
The upgrades of the foreign currency IDRs of the five foreign-owned banks - Yapi
ve Kredi Bankasi A.S. (YKB), Turk Ekonomi Bankasi A.S
(TEB), ING Bank A.S. (INGBT), Kuveyt Turk Katilim Bankasi A.S.
(Kuveyt Turk) and Turkiye Finans Katilim Bankasi A.S. (Turkiye Finans) - reflect
the reduction in Turkish transfer and convertibility risks, as reflected in the
upgrade of the Country Ceiling to 'BBB' from 'BBB-', and therefore the greater
probability that these banks will be able to utilise parent support to service
their debt. The upgrades of the local currency IDRs also reflect a reduction in
Turkish country risks.
The major shareholders of these banks are, respectively, UniCredit S.p.A.
('A-'/Negative), BNP Paribas (BNPP) ('A+'/Stable), ING Bank NV ('A+' Stable);
Kuwait Finance House ('A+'/Stable); and National Commercial Bank ( 'A+'/Stable).
Fitch believes the Turkish subsidiaries are in each case strategically important
to their parent banks, and the agency therefore factors into their ratings a
high probability of parent support. The IDRs of TEB, INGBT, Kuveyt Turk and
Turkiye Finans continue to be constrained by country risks.
The IDRs of YKB are not constrained given the level of Unicredit's Long-term IDR
and the ownership structure of the bank. Ultimate management control is equally
split between UniCredit and Koc Holding through a 50-50 joint venture. Although
both strategic shareholders have proven supportive of YKB, Fitch bases the
bank's support-driven ratings on those of UniCredit.
RATING ACTION RATIONALE AND SENSITIVITIES: SUB DEBT
The affirmation of Vakifbank's subordinated debt rating at 'BB' reflects the
fact that this is notched once off the bank's 'bb+' Viability Rating (VR), which
is unaffected by today's rating actions. This reflects Fitch's usual approach to
rating subordinated debt, and also its view that government support for
state-owned banks in Turkey will not necessarily in all circumstances be
extended to subordinated creditors. Any change in Vakifbank's VR would be likely
to lead to a change in the subordinated debt rating. Fitch has affirmed and
simultaneously withdrawn TEB's subordinated debt rating at 'BBB-', as this
rating is no longer considered by Fitch to be relevant to the agency's coverage.
RATING DRIVERS AND SENSITIVITIES - IDRS, SUPPORT RATINGS AND SENIOR DEBT
The IDRs of Ziraat, Halkbank, Vakifbank and TKB are sensitive to changes in the
IDRs of the Turkish sovereign. The Outlook on these is Stable and Fitch does not
expect any changes in the foreseeable future.
The IDRs of TEB, INGBT, Kuveyt Turk and Turkiye Finans are constrained by
Turkey's Country Ceiling and broader Turkish country risks and are sensitive to
any change in the Ceiling or Fitch's view of these risks. The Stable Outlook on
the Long-term IDRs of these banks mirrors that on the sovereign.
The banks could also be downgraded in case of a multi-notch downgrade of one of
the parent banks, or a marked reduction in the strategic importance of any of
the subsidiaries for their parents, but neither of these is currently
anticipated by Fitch.
The Outlook on YKB's Long-term IDRs is Negative, reflecting that on Unicredit's
rating. YKB's Long-term IDRs could be downgraded in case of a lowering of
UniCredit's Long-term IDR. However, the Long-term IDRs could stabilise at their
current level in case of an upgrade of YKB's VR.
REVIEW OF BANKS' VIABILITY RATINGS
The current review has only covered the support-driven ratings of these banks.
Fitch also intends to review in the next few weeks those Turkish bank VRs which
are closely tied to/constrained by the level of sovereign and macroeconomic
risks in the country.
In particular, Fitch will review the VRs and Long-term IDRs of the three largest
privately owned banks in Turkey, namely Turkiye Is Bankasi A.S., Turkiye Garanti
Bankasi A.S. and Akbank T.A.S., each currently rated 'BBB-'/Stable. As part of
this review, Fitch will also review the VR of YKB.
Fitch will also review the VRs of Ziraat, Halkbank and Vakifbank, each of which
is currently rated 'bb+'. As indicated above, any change in Vakifbank's VR will
likely result in change in subordinated debt rating (currently 'BB').
The rating actions are as follows:
T. C. Ziraat Bankasi A.S., Turkiye Halk Bankasi A.S., Turkiye Vakiflar Bankasi
T.A.O., Turkiye Kalkinma Bankasi A.S.:
Long-term foreign currency IDR: upgraded to 'BBB-' from 'BB+'; Stable Outlook
Long-term local currency IDR: upgraded to 'BBB' from 'BB+'; Stable Outlook
Short-term foreign and local currency IDR: upgraded to 'F3' from 'B'
Support Rating: upgraded to '2' from '3'
Support Rating Floor: revised to 'BBB-' from 'BB+'
National Long-term Rating: upgraded to AAA(tur) from 'AA+(tur)'; Stable Outlook
Senior unsecured debt issues (Halkbank, Vakifbank): Upgraded to 'BBB-' from
Viability Ratings (Ziraat, Halk and Vakif): unaffected at 'bb+'
Subordinated debt issues (Vakifbank): affirmed at 'BB'
Turk Ekonomi Bankasi A.S, ING Bank A.S., Kuveyt Turk Katilim Bankasi A.S., and
Turkiye Finans Katilim Bankasi A.S.
Long-term foreign currency IDR: upgraded to 'BBB' from 'BBB-'; Stable Outlook
Long-term local currency IDR: upgraded to 'BBB+' from 'BBB'; Stable Outlook
Short-term foreign currency IDR: affirmed at 'F3'
Short-term local currency IDR: upgraded to 'F2' from 'F3'
Support Rating: affirmed at '2'
National Long-term Rating: affirmed at 'AAA(tur)'; Stable Outlook
Senior unsecured debt issues (Kuveyt Turk): Upgraded to 'BBB' from 'BBB-'
Subordinated debt issues (TEB): Long-term rating affirmed at 'BBB-'; withdrawn
Viability Rating (Turkiye Finans, Kuveyt Turk): unaffected at 'bb-'
Viability Rating (TEB): unaffected at 'bb+'
Viability Rating (INGBT): unaffected at 'bb'
Yapi ve Kredi Bankasi A.S.
Long-term foreign currency IDR: upgraded to 'BBB' from 'BBB-'; Negative Outlook
Long-term local currency IDR: affirmed at 'BBB'; Negative Outlook
Short-term foreign and local currency IDR: affirmed at 'F3'
Support Rating: affirmed at '2'
National Long-term Rating: affirmed at 'AAA(tur)'; Outlook revised to Negative
Senior unsecured debt issues: Upgraded to 'BBB' from 'BBB-'
Viability Rating of 'bbb-' is unaffected
Additional information is available on www.fitchratings.com. The ratings above
were solicited by, or on behalf of, the issuer, and therefore, Fitch has been
compensated for the provision of the ratings.
Applicable criteria, 'Global Financial Institutions Rating Criteria' dated 15
August 2012, is available at www.fitchratings.com.
Applicable Criteria and Related Research:
Global Financial Institutions Rating Criteria