Moody’s reviews International Bank of Azerbaijan for downgrade

Moody's Investors Service has placed the Baa2 global local currency deposit rating and Baa3 foreign currency subordinated debt rating of International Bank of Azerbaijan (IBA) on review for possible downgrade.
The review of the global local currency deposit rating and foreign currency subordinated debt rating will look at the extent to which Azerbaijan's ability to provide support to its banking system, should such support be needed, has changed in the midst of the ongoing global economic and credit crisis.
Moody's will review the specific circumstances of Azerbaijan to determine the appropriate systemic support and the implications for IBA, which has been identified as being potentially affected. Factors that the rating agency will consider in its assessment of systemic support include the size of the banking system in relation to government resources, the level of stress in the banking system, the foreign currency obligations of the banking systems relative to the government's own foreign exchange resources, and changes to government political patterns and priorities.
Amid the recent crisis, the Azerbaijan government has been supportive by providing short-term liquidity to a number of banks facing repayments of foreign debt. At the same time, the credit stress in the banking system has increased significantly, with non-performing and restructured loans reaching a double-digit level. The total foreign borrowings of Azeri banks amount to around a manageable US$2 bln, with approximately one-half to be repaid this year; the bulk of this amount is due from IBA as the largest bank in the system.
Headquartered in Baku, Azerbaijan, International Bank of Azerbaijan reported total assets of AZN 3.8 bln (US$ 4.8 bln) and shareholders' equity of AZN 384.4 mln (US$ 479.9 mln) under IFRS at year-end 2008.