NEW YORK (S&P Global Ratings) March 9, 2022--S&P Global Ratings said today that it has lowered its long- and short-term issuer credit ratings on JSC Savings Bank Belarusbank and Belagroprombank JSC to 'CCC/C'. The ratings on both banks remain on CreditWatch with negative implications, where they were placed on March 1, 2022.
The rating action on the banks follows the lowering of the foreign and local currency sovereign credit ratings on Belarus to 'CCC/C' from 'B/B' on March 4, 2022. We now consider it likely that, absent an unforeseen positive development, Belarus will default on its commercial debt over the next 12 months. We also revised downward our transfer and convertibility assessment on Belarus to 'CCC' from 'B' at the same date (see Belarus Ratings Lowered To 'CCC' And Placed On CreditWatch Negative On Mounting Risks Related To Russia-Ukraine Conflict, published March 4, 2022, on RatingsDirect).
The downgrade of the two banks reflects our view of mounting economic, balance-of-payments, and financial stability risks following the imposition of strong international sanctions on Belarus, which stem from its involvement in Russia's military intervention against Ukraine. According to independent reports, Belarus has been supporting Russia by allowing it to use Belarusian territory as a staging post and to fire ballistic missiles against Ukraine. In response to Belarus' role in the ongoing conflict, the EU, the U.S., and the U.K., among others, have implemented unprecedented financial and economic sanctions on Belarus. These include measures against two Belarusian commercial banks: Bank Dabrabyt and Belinvestbank. Two other banks--BelVeb and Sberbank--are also affected, as they are subsidiaries of Russian parent banks that were sanctioned.
The extent of economic damage to Belarus is difficult to quantify, but we expect it to be very significant. In the past, Russia has provided substantial financial support to Belarus. We believe that current or future restrictions against Russia--which have materially undermined its external liquidity--will likely restrict its ability and willingness to extend further financial support to Belarus.
The increased involvement of Belarus in the Ukraine conflict could lead to more severe sanctions, including the exclusion of some banks from financial messaging system SWIFT (Society for Worldwide Interbank Financial Telecommunication), which could in turn affect the domestic financial sector. In addition, the financial performance of Belarusbank and Belagroprombank is closely tied to that of the sovereign because these banks have relied on support from the government in the past. We believe that this will likely substantially increase the default risk of financial institutions in Belarus.
CreditWatch
The ratings remain on CreditWatch negative to indicate that we could lower them further over the next few weeks. We expect to resolve the CreditWatch placement once we have more clarity on the technical ability and/or willingness of financial institutions to honor their financial obligations in full and on time.
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Related Research
- Belarus Ratings Lowered To 'CCC' And Placed On CreditWatch Negative On Mounting Risks Related To Russia-Ukraine Conflict, March 4, 2022
Ratings List
| * * * * * * * * * * * * * * Belagroprombank JSC * * * * * * * * * * * * * | ||
| Downgraded | ||
|---|---|---|
| To | From | |
|
Belagroprombank JSC |
||
| Issuer Credit Rating | CCC/Watch Neg/C | B/Watch Neg/B |
| * * * * * * * * * * * * * * * * * Belarusbank * * * * * * * * * * * * * * * * | ||
| Downgraded | ||
| To | From | |
|
Belarusbank |
||
| Issuer Credit Rating | CCC/Watch Neg/C | B/Watch Neg/B |
Certain terms used in this report, particularly certain adjectives used to express our view on rating relevant factors, have specific meanings ascribed to them in our criteria, and should therefore be read in conjunction with such criteria. Please see Ratings Criteria at www.standardandpoors.com for further information. A description of each of S&P Global Ratings' rating categories is contained in "S&P Global Ratings Definitions" at https://www.standardandpoors.com/en_US/web/guest/article/-/view/sourceId/504352 Complete ratings information is available to subscribers of RatingsDirect at www.capitaliq.com. All ratings affected by this rating action can be found on S&P Global Ratings' public website at www.standardandpoors.com. Use the Ratings search box located in the left column. Alternatively, call one of the following S&P Global Ratings numbers: Client Support Europe (44) 20-7176-7176; London Press Office (44) 20-7176-3605; Paris (33) 1-4420-6708; Frankfurt (49) 69-33-999-225; or Stockholm (46) 8-440-5914
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