S&P downgrades outlooks on five Belarusian banks

Standard & Poor's Ratings Services announced on Friday that it had revised to stable from positive its outlooks on five Belarusian banks.

The banks are the Development Bank of Belarus, Belarusbank, Bank BelVEB, BPS-Sberbank, and Belahraprambank.

At the same time, the international credit ratings agency affirmed its long- and short-term counterparty credit ratings on Belarusbank, BelVEB, BPS-Sberbank, and Belahraprambank at 'B-/C' and on the Development Bank of Belarus at 'B-/B'.

S&P said that the outlook revisions followed its similar action on Belarus. “We view the sovereign's creditworthiness as the key risk factor for Belarusian financial organizations because of their high operational, funding, and asset exposure to the predominantly state-owned Belarusian economy,” said the company.

The credit ratings agency warned that a worsening current account deficit and rising exchange rate pressures highlighted Belarus' vulnerability to external financing, which it said might hit Belarusian banks' financial profiles and increase their vulnerability to the challenging domestic operating environment.

The banks are owned either by Russian financial groups, “whose creditworthiness is substantially superior to that of Belarus,” or by the Belarusian government, which could provide them with “timely and sufficient extraordinary support.”

The stable outlooks on the five banks “mirror that on Belarus and reflect our view that there is no longer a one-in-three likelihood of an upgrade in the next 12 months,” said S&P.

It added that further rating actions on the banks could result from changes to its foreign currency sovereign credit ratings or transfer and convertibility assessment of Belarus.