Fitch Ratings-London/Moscow-19 July 2007: Fitch Ratings has today upgraded the ratings of four Gerogian banks, ProCredit Bank Georgia ("PCG"), JSC VTB Bank (Georgia) ("VTBG"), Bank of Georgia ("BOG") and TBC Bank ("TBC"). The ratings are listed below. This action follows yesterday's assignment by Fitch of Long-term foreign and local currency Issuer Default Ratings ("IDR") of 'BB-' (BB minus)/Stable Outlook to the Georgian sovereign.
The upgrades of all four banks reflect the greater probability of support being forthcoming in case of need. In the cases of PCG and VTBG, this is because of Fitch's revised view of Georgian country risks, in particular transfer and convertibility risks, as reflected in the Georgian Country Ceiling of 'BB-' (BB minus). This in turn implies a greater probability that PCG and VTBG will be able to receive, convert and pay out to creditors financial support from their majority shareholders. PCG is 91% owned by Germany's ProCredit Holding AG (Long-term IDR 'BBB-' (BBB minus)/Outlook Stable), while VTBG is 53% owned by Russia's VTB Bank (Long-term foreign and local currency IDRs 'BBB+'/Outlook Stable). VTBG and PCG are the third- and fourth-largest banks in Georgia, respectively, with market shares in total assets of 9% and 8% at end-June 2007.
In the cases of BOG and TBC, the upgrades reflect the greater probability of support from the Georgian sovereign, reflected in Georgia's Long-term IDRs. In Fitch's view, the Georgian authorities would likely have a high propensity to support BOG and TBC because of their systemic importance in the national banking sector. At end-June 2007, BOG was the largest bank in Georgia with 32% of assets and 25% of retail deposits, while TBC was the second-largest with 23% of assets and 29% of retail deposits.
ProCredit Bank Georgia:
Long-term foreign currency IDR upgraded to 'BB-' (BB minus) from 'B'
Long-term local currency IDR upgraded to 'BB' from 'B+',
Support rating upgraded to '3' from '4'
The Outlooks for the Long-term IDRs are Stable.
Short-term foreign and local currency IDRs affirmed at 'B'
Individual rating affirmed at 'D/E'
JSC VTB Bank (Georgia):
Long-term foreign currency IDR upgraded to 'BB-' (BB minus) from 'B'
Support rating upgraded to '3' from '4'
The Outlook for the foreign currency Long-term IDR is Stable
Short-term IDR affirmed at 'B'
Individual rating affirmed at 'D/E'
Bank of Georgia:
Long-term foreign and local currency IDRs upgraded to 'B+' from 'B'
Support rating upgraded to '4' from '5'
The Outlooks for the Long-term IDRs are Stable
Support Rating Floor changed to 'B+' from 'B-' (B minus)
Short-term foreign and local currency IDRs affirmed at 'B'
Individual rating affirmed at 'D'
TBC Bank:
Long-term foreign currency IDR upgraded to 'B+' from 'B-' (B minus)
Support rating upgraded to '4' from '5'
The Outlook for the Long-term foreign currency IDR is Stable
Support Rating Floor changed to 'B+' from 'B-' (B minus)
Short-term IDR affirmed at 'B'
Individual rating affirmed at 'D'
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