Research Update: Uzbekistan-Based Ravnaq Bank Downgraded To 'CCC-/C' On Rising Risk Of Liquidity Stress; Outlook Negative

Considering Ravnaq Bank's unresolved asset quality issues and persistent weak operating performance, we do not exclude the possibility of an eventual breach of regulatory capital requirements over the next six months in the absence of substantial capital injections. As a result, Ravnaq Bank's vulnerability to liquidity stress has increased against the backdrop of a less supportive operating environment. We note that the recent revocation of regulatory licenses from two commercial banks in Uzbekistan could heighten depositor sensitivity to weaker banks in the system. The bank's highly concentrated deposit base leaves it vulnerable to deposit outflows. In this context, current liquidity buffers at 60% of short-term liabilities may not be sufficient to withstand a liquidity stress scenario. We lowered our long-term

...- Considering Ravnaq Bank's unresolved asset quality issues and persistent weak operating performance, we do not exclude the possibility of an eventual breach of regulatory capital requirements over the next six months in the absence of substantial capital injections. - As a result, Ravnaq Bank's vulnerability to liquidity stress has increased against the backdrop of a less supportive operating environment. - We note that the recent revocation of regulatory licenses from two commercial banks in Uzbekistan could heighten depositor sensitivity to weaker banks in the system. - The bank's highly concentrated deposit base leaves it vulnerable to deposit outflows. In this context, current liquidity buffers at 60% of short-term liabilities may not be sufficient to withstand a liquidity stress scenario. - We lowered our long-term issuer credit rating on Ravnaq to '###-' from '###+'. - The negative outlook reflects our view that Ravnaq's status as a going concern could be at risk over the next six...

Research Update