The change in outlook from “indeterminate” to “stable” is due to the Bank’s punctual Eurobond coupon payment in December 2009, along with an agreement reached with investors to restructure the repayment schedule for eurobonds issued via Slavinvest Finance S.A. and repayment of 10% of the principal (plus coupon revenues accrued between 21 December 2009 and 15 January 2010) according to the new terms. The remaining amount of eurobonds has declined from $100mn at the date of issue to its current sum of $62.9mn.

Positive factors behind the rating include official backing (e.g. the re-extension of existing CBR loans); the support of BTA’s majority shareholder (including subordinated loans extended in October and November 2009); an effective management response to the noticeable increase in non-financial risks; a strong capital base; an established business; and minimal exposure to securities market risk.

Potentially destabilising factors include the ongoing significant impact of non-financial risks, which have triggered an increase in risks to liquidity against the background of a high short-term debt burden; a decline in ready opportunities to refinance the Bank’s obligations; a likely increase in credit risks under current unstable macroeconomic conditions; and loss-making operations.

About the Bank:
BTA Bank is a larger private-sector bank in which Kazakhstan’s BTA Bank – a system-critical financial institution active in all segments of its home market and the core of the BTA group – holds a 22.26% stake; the Russian bank’s ownership structure is otherwise unclear. The Bank has established a healthy presence in corporate services, its core line of business; is a leader in trade financing; and benefits from a broad range of international ties. BTA stands out for its advanced technology and high-quality services and its distribution network is moderately well developed.