articles Ratings /ratings/en/research/articles/220318-research-update-kazakhstan-based-sb-alfa-bank-rating-lowered-to-b-and-kept-on-creditwatch-negative-followi-12301393 content esgSubNav
In This List
RESUPD

Research Update: Kazakhstan-Based SB Alfa-Bank Rating Lowered To 'B' And Kept On CreditWatch Negative Following Rating Action On Parent

COMMENTS

Private Credit Casts A Wider Net To Encompass Asset-Based Finance And Infrastructure

COMMENTS

Navigating Regulatory Changes: Assessing New Regulations On Brazil's Financial Sector

Global Banks Outlook 2025

COMMENTS

Sustainability Insights: Five Takeaways From The IIF Annual Membership Meetings


Research Update: Kazakhstan-Based SB Alfa-Bank Rating Lowered To 'B' And Kept On CreditWatch Negative Following Rating Action On Parent

Overview

  • On March 7, 2022, S&P Global Ratings lowered its long- and short-term issuer credit ratings on Russia-based Alfa-Bank JSC and holding company, ABH Financial Ltd., to 'CCC-/C' following a similar action on Russia.
  • We are lowering our global scale ratings on Alfa-Bank JSC's Kazakhstan-based subsidiary, SB Alfa-Bank JSC (ABK), to 'B/B' due to the increased credit pressure on its parent.
  • We delinked the ratings on ABK from those on Alfa-Bank JSC because we think the credit stress on the parent has had a less material impact on ABK.
  • The ratings on ABK remain on CreditWatch with negative implications, indicating that we could lower them further.

Rating Action

On March 18, 2022, S&P Global Ratings lowered its long-term issuer credit rating on ABK to 'B' from 'BB'. At the same time, we affirmed the short-term issuer credit rating at 'B'.

In addition, we lowered our national scale rating to 'kzBB+' from 'kzA+'.

The ratings remain on CreditWatch with negative implications.

Rationale

We expect the deterioration in Alfa Banking Group's overall creditworthiness will affect ABK. ABK is the Kazakhstan-based subsidiary of Alfa Banking Group, which provides banking services predominantly in Russia, Kazakhstan, and Ukraine. Luxembourg-based holding company ABH Holdings S.A. is ABK's ultimate parent. Following our recent rating action on Russia (see "Russia Ratings Lowered To 'CCC-' And Kept On CreditWatch Negative On Increasing Risk Of Default," published on March 3, 2022), we lowered our ratings on Russia-based Alfa-Bank JSC to 'CCC-/C' from 'BB+/B' and our long-term ratings on its holding company, ABH Financial Ltd., to 'CCC-/C' from 'BB-/B'. We expect pressure on the group's creditworthiness, which is mostly spurred by Alfa-Bank JSC (85% of total group assets), will adversely affect ABK.

We think ABK has a somewhat lower default likelihood than Alfa-Bank JSC. Our 'B' long-term global scale rating on ABK stands four notches above that on Alfa-Bank JSC. We have delinked the ratings on ABK from those on Alfa-Bank JSC because we think the credit stress on the parent has had a less material impact on ABK. We note that ABK's funding and operations are independent of the parentand it maintains adequate liquidity. In addition, we expect the Kazakhstan regulatory authorities would take action where necessary to protect ABK's credit profile.

CreditWatch

The ratings remain on CreditWatch negative to indicate that we could lower them further. We expect to resolve the CreditWatch placement once we have more clarity on geopolitical and economic risks in Russia and their implications for ABK's liquidity and business stability.

Related Criteria

Related Research

Ratings List

Downgraded
To From

SB Alfa-Bank JSC

Issuer Credit Rating
Kazakhstan National Scale kzBB+/Watch Neg/-- kzA+/Watch Neg/--
Downgraded; Ratings Affirmed
To From

SB Alfa-Bank JSC

Issuer Credit Rating B/Watch Neg/B BB/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

Analytical Group Contact:Financial Institutions EMEA;
Financial_Institutions_EMEA_Mailbox@spglobal.com

No content (including ratings, credit-related analyses and data, valuations, model, software, or other application or output therefrom) or any part thereof (Content) may be modified, reverse engineered, reproduced, or distributed in any form by any means, or stored in a database or retrieval system, without the prior written permission of Standard & Poor’s Financial Services LLC or its affiliates (collectively, S&P). The Content shall not be used for any unlawful or unauthorized purposes. S&P and any third-party providers, as well as their directors, officers, shareholders, employees, or agents (collectively S&P Parties) do not guarantee the accuracy, completeness, timeliness, or availability of the Content. S&P Parties are not responsible for any errors or omissions (negligent or otherwise), regardless of the cause, for the results obtained from the use of the Content, or for the security or maintenance of any data input by the user. The Content is provided on an “as is” basis. S&P PARTIES DISCLAIM ANY AND ALL EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE, FREEDOM FROM BUGS, SOFTWARE ERRORS OR DEFECTS, THAT THE CONTENT’S FUNCTIONING WILL BE UNINTERRUPTED, OR THAT THE CONTENT WILL OPERATE WITH ANY SOFTWARE OR HARDWARE CONFIGURATION. In no event shall S&P Parties be liable to any party for any direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, or losses (including, without limitation, lost income or lost profits and opportunity costs or losses caused by negligence) in connection with any use of the Content even if advised of the possibility of such damages.

Credit-related and other analyses, including ratings, and statements in the Content are statements of opinion as of the date they are expressed and not statements of fact. S&P’s opinions, analyses, and rating acknowledgment decisions (described below) are not recommendations to purchase, hold, or sell any securities or to make any investment decisions, and do not address the suitability of any security. S&P assumes no obligation to update the Content following publication in any form or format. The Content should not be relied on and is not a substitute for the skill, judgment, and experience of the user, its management, employees, advisors, and/or clients when making investment and other business decisions. S&P does not act as a fiduciary or an investment advisor except where registered as such. While S&P has obtained information from sources it believes to be reliable, S&P does not perform an audit and undertakes no duty of due diligence or independent verification of any information it receives. Rating-related publications may be published for a variety of reasons that are not necessarily dependent on action by rating committees, including, but not limited to, the publication of a periodic update on a credit rating and related analyses.

To the extent that regulatory authorities allow a rating agency to acknowledge in one jurisdiction a rating issued in another jurisdiction for certain regulatory purposes, S&P reserves the right to assign, withdraw, or suspend such acknowledgement at any time and in its sole discretion. S&P Parties disclaim any duty whatsoever arising out of the assignment, withdrawal, or suspension of an acknowledgment as well as any liability for any damage alleged to have been suffered on account thereof.

S&P keeps certain activities of its business units separate from each other in order to preserve the independence and objectivity of their respective activities. As a result, certain business units of S&P may have information that is not available to other S&P business units. S&P has established policies and procedures to maintain the confidentiality of certain nonpublic information received in connection with each analytical process.

S&P may receive compensation for its ratings and certain analyses, normally from issuers or underwriters of securities or from obligors. S&P reserves the right to disseminate its opinions and analyses. S&P's public ratings and analyses are made available on its Web sites, www.spglobal.com/ratings (free of charge), and www.ratingsdirect.com (subscription), and may be distributed through other means, including via S&P publications and third-party redistributors. Additional information about our ratings fees is available at www.spglobal.com/usratingsfees.

 

Create a free account to unlock the article.

Gain access to exclusive research, events and more.

Already have an account?    Sign in