The affected banks are T.C. Ziraat Bankasi A.S., Turkiye Is Bankasi A.S., Turkiye Garanti Bankasi A.S., Akbank T.A.S., Turkiye Halk Bankasi A.S., Yapi ve Kredi Bankasi A.S.,Turkiye Vakiflar Bankasi T.A.O., QNB Finansbank A.S., Denizbank A.S., Turk Ekonomi Bankasi A.S., HSBC Bank A.S. (Turkey) and Alternatifbank A.S., Moody's said in a statement on Thursday.
"The rating actions are driven by changes in the local currency (LC) and foreign currency (FC) country ceilings applied to the jurisdictions of the banks following the publication of Moody's updated Country Ceilings Methodology on 7 December 2020," the ratings agency said.
Moody's also upgraded the long-term foreign currency deposit ratings of banks in Bahrain, Oman, Jordan and Pakistan.
Moody's also said in the statement:
Today's rating actions on 30 banks in Middle East, Pakistan and Turkey are driven by changes in country ceilings under Moody's updated country ceilings methodology. Country ceilings typically indicate the highest rating level that would generally be assigned to the financially strongest obligations of issuers domiciled in a country, absent exceptional considerations such as external support from outside the country.
The updated ceilings methodology has unified deposit ceilings with the typically higher debt ceilings, whereby LC and FC country ceilings are no longer distinguished between deposit and debt ceilings. These changes reflect Moody's view that the risks that affect access to bank deposits are not materially different from those that affect the ability of banks and non-banks to service their debt obligations.
FOREIGN CURRENCY CEILINGS
As a result of the methodology change, FC ceilings as applied to FC deposits were raised in Bahrain, Oman, Jordan, Pakistan and Turkey, resulting in upgrades of long-term FC deposits of 29 banks and the long-term FC issuer rating of one bank. [...]
The outlooks on the long-term FC deposit ratings for 24 of the 30 banks affected by today's rating actions were maintained. [...]
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS [...]
An upgrade of the banks' long-term deposit ratings is unlikely, given the current negative outlook. Moody's could change the outlook to stable following a stabilisation of Turkey's sovereign outlook, an improvement of the operating environment, which would stabilise the banks' stock of problem loans and profitability, and a further structural reduction of the banks' reliance on foreign currency funding.
Conversely, Moody's could downgrade the banks' long-term deposit and senior debt ratings -- where applicable - following a downgrade of Turkey's sovereign debt rating, a further deterioration in Turkey's operating environment, a higher-than-expected deterioration of asset quality and profitability, or a material decline in capital ratios."
