Fitch Ratings international ratings agency has reported that PJSC CB PrivatBank's Long-Term Local Currency IDR and its National Rating have not been affected as Fitch currently has insufficient information about the results of the bank’s recapitalisation. The 'f' Viability Rating has not been affected by these rating actions either, as the bank's recapitalisation had not been completed at the moment of the rating confirmation.
According to the agency’s official statement, Fitch expects to review and upgrade the bank's Foreign Currency IDRs and Viability Rating once sufficient information is available on the bank's post-recapitalisation credit profile. The downgrade of PJSC CB PrivatBank's (Dnipro) Long-Term Foreign Currency Issuer Default Rating (IDR) to 'RD' (Restricted Default) from 'CCC' is a mandatory technical procedure in view of the technicalities of the bank’s nationalisation.
“Nationalisation of the country’s largest private bank is a unique experience not only for Ukraine, but also for the global financial market. PrivatBank’s current temporary ratings reflect agencies’ technical procedures rather than the financial situation of the bank”, notes PrivatBank’s press center. “In December, the Ministry of Finance of Ukraine made a payment for the shares of PrivatBank totaling UAH 107 billion. The positive results of the bank’s recapitalisation, including those connected to the issuance of government bonds with indexation by foreign currency rates, allow the bank to provide liquidity for its foreign currency liabilities and we expect an increase of our ratings up to the sovereign’s level.”
To remind readers, the International Monetary Fund and other experts praised the results of PrivatBank’s nationalisation. As the Fund reported, such a decision was an important step by the Ukrainian authorities in trying to boost financial stability.
Based on the words of Christine Lagarde, IMF Managing Director, this decision was taken to ensure the smooth operations of the bank given its systemic role in Ukraine’s financial system. Ensuring that all banks operating in Ukraine meet capital and regulatory requirements is essential to maintain public confidence in the banking system.