Moody's reviews four banks in Belarus for downgrade

Moody's Investors Service has placed the ratings of four Belarusian banks on review for possible downgrade. The banks affected are Belagroprombank, Belarusbank, Belinvestbank and Belpromstroibank.

The review of the deposit ratings will look at the extent to which Belarus'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 Belarus to determine the appropriate systemic support for Belarusian bank ratings and the implications for the four banks that have 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.

The Belarusian banking system is highly concentrated in terms of state ownership and is extensively involved in financing the government-related sector, including state programmes. The government has been active in supporting the state-related banks with both liquidity and capital, as reflected by the recent capital injection of BYR3 trln (US$1.4 bln) in four state-owned banks in December 2008. Furthermore, the Belarusian government has been proactive in providing the banking system with various liquidity tools including unsecured lending from the National Bank of Belarus.

However, Moody's also notes that the large state sector, which takes a prominent place in the Belarusian economy, could potentially require substantial government support, resulting in a strain on the government's resources and undermining its capability to support the banking sector without triggering adverse macroeconomic effects.



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