August 25, 2016 / 4:30 PM / 3 years ago

Fitch Revises 18 Turkish Banks' Outlooks to Negative on Sovereign Change

(The following statement was released by the rating agency) LONDON, August 25 (Fitch) Fitch Ratings has revised the Outlooks to Negative from Stable on18 Turkish banks, while affirming their Issuer Default Ratings (IDRs). In addition, the ratings of those banks' financial subsidiaries, which are driven by institutional support, are affirmed and their Outlooks are revised to Negative. A full list of rating actions is available at the end of this commentary. The rating actions follows the revision of the Outlook on Turkey's sovereign IDRs to Negative from Stable (see 'Fitch Affirms Turkey at 'BBB-'; Revises Outlook to Negative' dated 19 August 2016 at www.fitchratings.com). KEY RATING DRIVERS AND SENSITIVITIES - IDRS, SUPPORT RATINGS, SUPPORT RATINGS FLOORS (SRF), DEBT RATINGS The revision of the Outlooks on the Long-Term IDRs of T.C. Ziraat Bankasi A.S. (Ziraat), Turkiye Halk Bankasi A.S. (Halk), Turkiye Vakiflar Bankasi T.A.O. (Vakif), Istanbul Takas ve Saklama Bankasi A.S. - (Takasbank), Turkiye Sinai Kalkinma Bankasi A.S.(TSKB), Turkiye Kalkinma Bankasi A.S. (TKB) and Turkiye Ihracat Kredi Bankasi AS (Turk Eximbank), reflects the increased likelihood of a deterioration in the government's ability to provide support given the Negative Outlook on the sovereign rating. They also reflect the potential for those banks whose Viability Ratings (VR) are at the same level as the sovereign, to be downgraded due to the effects of a worsening operating environment. In the case of Takasbank, whose IDR is driven by its standalone creditworthiness, the Negative Outlook reflects its exposure purely to Turkish bank counterparty risk in the context of the deteriorating operating environment. Consequently, a downgrade of the Turkish sovereign would likely lead to a downgrade of the Long-Term IDRs of all seven entities. In the event that their Long-Term IDRs are downgraded Fitch would also expect to downgrade the banks' Short-Term IDRs. The IDRs of the seven entities are underpinned by their 'BBB-' Support Rating Floors, reflecting Fitch's view of a high probability of support from the Turkish authorities in case of need. The SRFs of Ziraat, Halk and Vakif reflect their (i) state ownership (ii) policy roles (Ziraat, Halk) (iii) systemic importance, and (iv) significant state-related deposits. Takasbank's SRF refects the exceptionally high systemic importance of the bank given its role as the country's clearing centre and, as a result of its interconnectedness with the financial sector, and the potential contagion risk in the event of a default. The SRFs of TSKB, TKB and Turk Eximbank reflect (i) the banks' policy roles (ii) majority state ownership (TKB and Turk Eximbank) and (iii) government support of the banks' funding. Fitch has not assigned VRs to these banks as a result of their policy roles and funding profiles. Akbank T.A.S.'s (Akbank) and Turkiye Is Bankasi A.S.'s (Isbank) IDRs are driven by their VRs. Their lower SRFs of 'BB-' reflect only a moderate probability of support from the Turkish state on account of their ownership structures while also taking into account the banks' systemic importance and market shares. The revised Outlooks on the 'BBB' support-driven Long-Term IDRs of the foreign-owned commercial banks, Turkiye Garanti Bankasi A.S. (Garanti), ING Bank A.S. (INGBT), Turk Ekonomi Bankasi A.S. (TEB), Finansbank A.S. (Finansbank), ICBC Turkey Bank A.S. (ICBC Turkey), Burgan Bank A.S. (Burgan), Alternatifbank A.S. (ABank), and the foreign-owned participation banks Kuveyt Turk Katilim Bankasi A.S (Kuveyt Turk) and Turkiye Finans Katilim Bankasi AS (Turkiye Finans), all of which are at the level of Turkey's Country Ceiling, reflect the increased likelihood of a downgrade of the Country Ceiling following the change in the sovereign's Outlook. Turkey's Country Ceiling reflects transfer and convertibility risks and limits the extent to which support from foreign shareholders can be factored into the banks' Long-Term IDRs. At the same time their Local Currency IDRs, whose Outlooks have also been revised to Negative, continue to take into account Turkish country risks. The IDRs, Support Ratings and debt ratings of all nine foreign-owned banks reflect Fitch's view that their parents continue to have a strong propensity to provide support, notwithstanding the change in sovereign outlook, given the subsidiaries' ownership structures, integration and, in some cases, common branding. KEY RATING DRIVERS AND SENSITIVITIES -SUBSIDIARIES OF FOREIGN OWNED BANKS The IDRs of the Garanti Faktoring A.S., Garanti Finansal Kiralama A.S. (Garanti Leasing), Finans Finansal Kiralama A.S. (Finans Leasing), Alternatif Finansal Kiralama AS (ALease) are equalised with those of their respective parents, reflecting their strategic importance to and integration with their respective groups. Consequently, the revision of their Outlooks to Negative from Stable mirrors the rating action on their parents and indicates a possible weakening of their parents' ability to support them. The ratings of these entities are sensitive to changes in the ratings of their respective parent banks. KEY RATING DRIVERS AND SENSITIVITIES - VRS The 'bbb-' VRs of Ziraat, Halk, Vakif, Garanti, TEB and Finansbank are unaffected as a result of the change in sovereign outlook, while the VRs of Takasbank, Akbank and Isbank, which drive the banks' IDRs, are affirmed. The operating environment and Turkish sovereign rating remain key sensitivities for all banks' VRs given their exposure to the domestic economy and exposure to investor sentiment as evidenced by the banks' high level of foreign currency wholesale funding. Consequently, a sovereign downgrade would likely have a negative impact on the banks' standalone credit profiles and lead to a downgrade of their VRs. Stabilisation of the sovereign's credit profile and the country's economic prospects would reduce downward pressure on the banks' VRs. The VRs of INGBT, ICBC Turkey, Burgan, ABank, Kuveyt Turk and Turkiye Finans are also unaffected by the sovereign outlook action. A weaker operating environment may have less direct or immediate impact on those banks' VRs as they are currently below the level of the sovereign rating and therefore have a somewhat greater tolerance to modest operating environment deterioration. KEY RATING DRIVERS AND SENSITIVITIES - SUBSIDIARIES OF DOMESTICALLY PRIVATELY OWNED BANKS The IDRs of the subsidiaries of Akbank and Isbank, AK Finansal Kiralama A.S. (Aklease), Ak Yatirim Menkul Degerler AS (Ak Investment), Akbank AG, Is Faktoring A.S., Is Finansal Kiralama A.S. (Is Leasing) and Is Yatirim Menkul Degerler A.S. (Is Investment) are equalised with those of their respective parents, reflecting their strategic importance to and integration with their respective groups. Consequently, the revision of their Outlooks to Negative from Stable mirrors the rating action on their parents and indicates a possible weakening of their parents' ability to support them. The ratings of these entities are sensitive to changes in the ratings of their respective parent banks. KEY RATING DRIVERS AND SENSITIVITIES - SUBORDINATED DEBT RATINGS Vakif's and Isbank's subordinated debt ratings are notched once off their 'bbb-' VRs, reflecting Fitch's view that government support will not necessarily be extended to subordinated creditors. As such, the ratings are sensitive to changes in the bank's VRs. ABank's and Kuveyt Turk's subordinated debt ratings are notched down from their Long-Term Foreign Currency IDRs and as such are sensitive to changes in the banks' support-driven ratings, reflecting Fitch's view that support from their respective institutional owners would extend to subordinated creditors. The ratings of the notes of all four banks are also sensitive to a change in notching due to a change in Fitch's assessment of the probability of the notes' non-performance risk relative to the risk captured in their respective anchor ratings, or in its assessment of loss severity in case of non-performance. KEY RATING DRIVERS AND SENSITIVITIES - NATIONAL RATINGS The affirmation of all banks' and subsidiaries National Ratings with Stable Outlooks reflects Fitch's view that the creditworthiness of the banks relative to each other and to other Turkish banks has not changed significantly as a result of the sovereign Outlook change. The rating actions are as follows: T.C. Ziraat Bankasi A.S.: Long-Term Foreign and Local Currency IDRs affirmed at 'BBB-'; Outlook revised to Negative from Stable Short-Term Foreign and Local Currency IDRs affirmed at 'F3' Viability Rating unaffected at 'bbb-' Support Rating affirmed at '2' Support Rating Floor affirmed at 'BBB-' Senior unsecured long term debt affirmed at 'BBB-' Senior unsecured short-term debt affirmed at 'F3' National Long-Term Rating affirmed at 'AAA(tur)'; Outlook Stable Turkiye Halk Bankasi A.S.: Long-Term Foreign and Local Currency IDRs affirmed at 'BBB-'; Outlook revised to Negative from Stable Short-Term Foreign and Local Currency IDRs affirmed at 'F3' Viability Rating unaffected at 'bbb-' Support Rating affirmed at '2' Support Rating Floor affirmed at 'BBB-' Senior unsecured long term debt affirmed at 'BBB-' National Long-Term rating affirmed at 'AAA(tur)'; Outlook Stable Turkiye Vakiflar Bankasi T.A.O.: Long-Term Foreign and Local Currency IDRs affirmed at 'BBB-'; Outlook revised to Negative from Stable Short-Term Foreign and Local Currency IDRs affirmed at 'F3' Viability Rating unaffected at 'bbb-' Support Rating affirmed at '2' Support Rating Floor affirmed at 'BBB-' Senior unsecured long term debt affirmed at 'BBB-' Senior unsecured short-term debt affirmed at 'F3' Subordinated debt rating: affirmed at 'BB+' National Long-Term Rating affirmed at 'AAA(tur)'; Outlook Stable Istanbul Takas ve Saklama Bankasi A.S. - Takasbank: Long-Term Foreign and Local Currency IDRs affirmed at 'BBB-'; Outlook revised to Negative from Stable Short-Term Foreign and Local Currency IDRs affirmed at 'F3' Viability Rating affirmed at 'bbb-' Support Rating affirmed at '2' Support Rating Floor affirmed at 'BBB-' National Long-Term rating affirmed at 'AAA(tur)'; Outlook Stable TKB,: Long-Term Foreign and Local Currency IDRs: affirmed at 'BBB-'; Outlook revised to Negative from Stable Short-Term Foreign and Local Currency IDRs: affirmed at 'F3' Support Rating: affirmed at '2' Support Rating Floor: affirmed at 'BBB-' National Long-Term Rating: affirmed at 'AAA(tur)'; Stable Outlook TSKB: Long-Term Foreign and Local Currency IDRs: affirmed at 'BBB-'; Outlook revised to Negative from Stable Short-Term Foreign and Local Currency IDRs: affirmed at 'F3' Support Rating: affirmed at '2' Support Rating Floors: affirmed at 'BBB-' National Long-Term Rating affirmed at 'AAA(tur)'; Stable Outlook Senior unsecured long term debt affirmed at 'BBB-': Senior unsecured long term debt programme affirmed at 'BBB-' Senior unsecured short term debt programme affirmed at 'F3' Turk Eximbank: Long-Term Foreign and Local Currency IDRs: affirmed at 'BBB-'; Outlook revised to Negative from Stable Short-Term Foreign and Local Currency IDRs: affirmed at 'F3' Support Rating: affirmed at '2' Support Rating Floor: affirmed at 'BBB-' National Long-Term Rating: affirmed at 'AAA(tur)'; Stable Outlook Senior unsecured long term debt affirmed at 'BBB-' Senior unsecured debt programme affirmed at 'BBB-' Turk Ekonomi Bankasi A.S., Finansbank A.S.: Long-Term Foreign and Local Currency IDRs affirmed at 'BBB'; Outlook revised to Negative from Stable Short-Term Foreign and Local Currency IDRs affirmed at 'F2' Viability Rating unaffected at 'bbb-' Support Rating affirmed at '2' National Long-Term Rating affirmed at 'AAA(tur)'; Stable Outlook Senior unsecured long term debt affirmed at 'BBB' Senior unsecured short term debt affirmed at 'F2' ING Bank A.S.: Long-Term Foreign and Local Currency IDRs affirmed at 'BBB'; Outlook revised to Negative from Stable Short-term Foreign and Local Currency IDRs affirmed at 'F2' Viability Rating unaffected at 'bb+' Support Rating affirmed at '2' National Long-Term Rating affirmed at 'AAA(tur)'; Stable Outlook Kuveyt Turk Katilim Bankasi A.S,: Long-Term Foreign and Local Currency IDRs affirmed at 'BBB'; Outlook revised to Negative from Stable Short-Term Foreign and Local Currency IDRs affirmed at 'F2' Viability Rating unaffected at 'bb-' Support Rating affirmed at '2' National Long-Term Rating affirmed at 'AAA(tur)'; Stable Outlook Senior unsecured debt (sukuk) issued by Kuvey Turk's KT Sukuk Varlik Kiralama A.S., KT Kira Sertifikalari Varlik Kiralama A.S. affirmed at 'BBB' Subordinated debt issued by KT Sukuk Company Limited affirmed at 'BBB-' Turkiye Finans Katilim Bankasi A.S.: Long-Term Foreign and Local Currency IDRs affirmed at 'BBB'; Outlook revised to Negative from Stable Short-Term Foreign and Local Currency IDRs affirmed at 'F2' Viability Rating unaffected at 'bb-' Support Rating affirmed at '2' National Long-Term Rating affirmed at 'AAA(tur)'; Stable Outlook Senior unsecured debt issues (sukuk) issued by TF Varlik Kiralama A.S. affirmed at 'BBB' ICBC Turkey Bank A.S, Burgan Bank A.S.: Long-Term Foreign and Local Currency IDRs affirmed at 'BBB'; Outlook revised to Negative from Stable Short-Term Foreign and Local Currency IDRs affirmed at 'F2' Viability Rating unaffected at 'b+' Support Rating affirmed at '2' National Long-Term Rating affirmed at 'AAA(tur)' Stable Outlook Alternatifbank A.S.: Long-Term Foreign and Local Currency IDRs affirmed at 'BBB'; Outlook revised to Negative from Stable Short-Term Foreign and Local Currency IDRs affirmed at 'F2' Viability Rating unaffected at 'b+' Support Rating affirmed at '2' National Long-Term Rating affirmed at 'AAA(tur)' Stable Outlook Guaranteed debt affirmed at 'A+' Subordinated debt affirmed at 'BBB-' Alternatif Finansal Kiralama A.S. Long-Term Foreign and Local Currency IDRs affirmed at 'BBB'; Outlook revised to Negative from Stable Short-Term Foreign and Local Currency IDRs affirmed at 'F2' Support Rating affirmed at '2' National Long-Term Rating affirmed at 'AAA(tur)'; Stable Outlook Finans Finansal Kiralama A.S. Long-Term Foreign and Local Currency IDRs: affirmed at 'BBB'; Outlook revised to Negative from Stable Short-Term Foreign and Local Currency IDRs affirmed at 'F2' Support Rating affirmed at '2' National Long-Term Rating affirmed at 'AAA(tur)'; Stable Outlook Akbank T.A.S. Long-Term Foreign and Local Currency IDRs: affirmed at 'BBB-'; Outlook revised to Negative from Stable Short-Term Foreign and Local Currency IDRs: affirmed at 'F3' Viability Rating affirmed at 'bbb-' Support Rating affirmed at '3' Support Rating Floor affirmed at 'BB-' National Long-Term Rating affirmed at 'AA+(tur)'; Outlook Stable Senior unsecured long term debt affirmed at 'BBB-' Senior unsecured short term debt affirmed at 'F3' Turkiye Is Bankasi A.S. Long-Term Foreign and Local Currency IDRs: affirmed at 'BBB-'; Outlook revised to Negative from Stable Short-Term Foreign and Local Currency IDRs: affirmed at 'F3' Viability Rating affirmed at 'bbb-' Support Rating affirmed at '3' Support Rating Floor affirmed at 'BB-' National Long-Term Rating affirmed at 'AA+(tur)'; Outlook Stable Senior unsecured long term debt affirmed at 'BBB-' Senior unsecured short term debt affirmed at 'F3' Subordinated debt affirmed at 'BB+' Turkiye Garanti Bankasi A.S. Long-Term Foreign and Local Currency IDRs affirmed at 'BBB'; Outlook revised to Negative from Stable Short-Term Foreign and Local Currency IDRs affirmed at 'F2' Viability Rating unaffected at 'bbb-' Support Rating affirmed at '2' National Long-Term Rating affirmed at 'AAA(tur)' ; Outlook Stable Senior unsecured long term debt affirmed at 'BBB' Senior unsecured short term debt affirmed at 'F2' Akbank AG Long-Term Foreign Currency IDR: affirmed at 'BBB-'; Outlook revised to Negative from Stable Short-Term Foreign Currency IDR: affirmed at 'F3' Support Rating affirmed at '2' Ak Finansal Kiralama A.S. and Ak Yatirim Menkul Degerler A.S. Long-Term Foreign and Local Currency IDRs: affirmed at 'BBB-'; Outlook revised to Negative from Stable Short-Term Foreign and Local Currency IDRs: affirmed at 'F3' Support Rating affirmed at '2' National Long-Term Rating affirmed at 'AA+(tur)'; Outlook Stable Senior unsecured debt Long-term ratings (Ak Finansal only) affirmed at 'BBB-' Senior unsecured debt Short-term ratings (Ak Finansal only) affirmed at 'F3' Is Finansal Kiralama A.S. and Is Faktoring A.S. Long-Term Foreign and Local Currency IDRs: affirmed at 'BBB-'; Outlook revised to Negative from Stable Short-Term Foreign and Local Currency IDRs: affirmed at 'F3' Support Rating affirmed at '2' National Long-Term Rating affirmed at 'AA+(tur)'; Outlook Stable Is Yatirim Menkul Degerler A.S. National Long-Term Rating affirmed at 'AA+(tur)'; Outlook Stable Garanti Faktoring A.S. and Garanti Finansal Kiralama A.S. Long-Term Foreign and Local Currency IDRs: affirmed at 'BBB'; Outlook revised to Negative from Stable Short-Term Foreign and Local Currency IDRs: affirmed at 'F2' Support Rating affirmed at '2' National Long-Term Rating affirmed at 'AAA(tur)'; Outlook Stable Contact: Primary Analysts Lindsey Liddell (Ziraat, Halk, Vakifbank, Akbank, Garanti, Kuveyt Turk, Turkiye Finans, ABank, ALease, Burgan, TEB, Akbank AG, Aklease, Ak Investment, Garanti Faktoring, Garanti Leasing) Director +44 20 3530 1008 Fitch Ratings Limited 30 North Colonnade London E14 5GN Aslan Tavitov (ICBC Turkey, ING Bank A.S, Finansbank, Finans Leasing, Isbank, Is Leasing, Is Faktoring, Is Investment) Director +44 20 3530 1788 Fitch Ratings Limited 30 North Colonnade London E14 5GN Sandra Hamilton (TKB, TSKB, TurkEximbank) Director +44 20 3530 1266 Fitch Ratings Limited 30 North Colonnade London E14 5GN Christian Kuendig (Takasbank) Senior Director +44 20 3530 1399 Fitch Ratings Limited 30 North Colonnade London E14 5GN Secondary Analysts Lindsey Liddell (Isbank) Director +44 20 3530 1008 Aslan Tavitov (Akbank, Garanti) Director +44 20 3530 1788 Huseyin Sevinc (Ziraat, Halk, Vakifbank, ICBC Turkey, TKB, TSKB, Turk Eximbank, Is Leasing, Is Faktoring, Is Investment, Garanti Faktoring, Garanti Leasing) Analyst +44 20 3530 1027 Ahmet Kilinc (Kuveyt Turk, Turkiye Finans, ABank, ALease, Burgan, ING Bank A.S, Finansbank, Finans Leasing, TEB, Aklease, Akbank AG, AK Investment) Analyst +44 20 3530 1272 Evgeny Konavalov (Takasbank) Director +1 212 612 7839 Committee Chairperson Gordon Scott Managing Director +44 20 3530 1075 Media Relations: Elaine Bailey, London, Tel: +44 203 530 1153, Email: elaine.bailey@fitchratings.com. Additional information is available on www.fitchratings.com Applicable Criteria Criteria for Rating Sukuk (pub. 16 Aug 2016) here Global Bank Rating Criteria (pub. 15 Jul 2016) here Global Non-Bank Financial Institutions Rating Criteria (pub. 15 Jul 2016) here Additional Disclosures Dodd-Frank Rating Information Disclosure Form here _id=1010799 Solicitation Status here Endorsement Policy here ail=31 ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

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