Bank of Georgia, TBC headed for downgrade – Moody’s

Moody's Investors Service has placed on review for possible downgrade the D- bank financial strength ratings (BFSRs) and Ba1 long-term local currency deposit ratings of the two rated Georgian banks, Bank of Georgia and TBC Bank. The rating agency has also changed the outlooks on these banks' B3 foreign currency deposit and Ba2 debt ratings to ‘negative’ from ‘stable’.
These rating actions have been prompted by the outbreak of military conflict between Georgia and Russia. Although Moody's is not currently in a position to fully assess the extent of the possible ramifications given the extraordinary circumstances, it will continue to closely monitor the situation. The rating agency cautions that prolonged hostilities could result in material damage to the Georgian economy and financial sector, deterring the foreign direct investment that has been a key growth driver in recent years. The conflict has already resulted in a halt of bank lending.
Moody's rating review will focus on assessing the impact of the conflict on the overall financial position of the banks, particularly on their liquidity profiles, asset quality indicators and economic solvency, which in turn may lead to multi-notch downgrades of the banks' local currency deposit ratings.
Bank of Georgia is headquartered in Tbilisi and had total assets of USD1.9 bln at the end of 2007. TBC Bank is also based in Tbilisi and had total assets of USD1.1
bln at the end of 2007.