Yapi ve Kredi Bankasi A.S. (YapiKredi). At the same time, we affirmed the 'BB/B'
long- and short-term counterparty credit ratings on Isbank, Garanti Leasing,
YapiKredi, HSBC Bank A.S., and VakifBank, and the 'BB' long-term counterparty
credit rating on Garanti. We also affirmed the Turkey national scale long- and
short-term ratings at 'trAA/trA-1' on Isbank, VakifBank, YapiKredi, and HSBC
Bank A.S. Rationale The outlook revisions follow that on the sovereign, the
Republic of Turkey (foreign currency, BB/Stable/B; local currency,
BBB-/Stable/A-3), reflecting our concern that less-buoyant external demand and
worsening terms of trade could inhibit Turkey's economic rebalancing (see
'Outlook On Turkey Long-Term Rating Revised To Stable From Positive; 'BB/B' FC
And 'BBB-/A-3' LC Ratings Affirmed,' published on May 1, 2012, on RatingsDirect
on the Global Credit Portal). We expect Turkey's creditworthiness to continue to
be a key driver of future rating actions on Turkish banks because of their
significant holdings of government securities and general exposure to the
domestic environment. Our Banking Industry Country Risk Assessment (BICRA) on
Turkey remains unchanged in group '5', on a scale from '1' to '10', ranging from
the lowest-risk banking systems in group '1' to the highest risk in group '10'.
However, Turkey's above 8% annual real GDP growth over the past two years has
been largely driven by rapid domestic credit expansion, financed mainly by
short-term external funding for banks. The increasing use of cross-border
borrowing to fund asset growth is a risk for Turkish banks. Rising risk aversion
in global capital markets could also erode investor confidence in Turkey and
Turkish banks. Outlook The stable outlooks reflect that on the sovereign.
Turkish banks' financial performance and fundamentals will remain highly
correlated with sovereign creditworthiness through, among other things, their
significant holdings of government securities and exposure to the domestic
economic and financial environment. Therefore, a negative rating action on the
sovereign would trigger the same on these entities. We would also consider
negative rating actions on these institutions if Turkey's economy deteriorated
more than we currently expect and put additional pressure on their asset
quality, funding profiles, or financial performances. A positive rating action
on the sovereign, all other things being equal, would lead to positive rating
actions on the six financial institutions. Related Criteria And Research --
Outlook On Turkey Long-Term Rating Revised To Stable From Positive; 'BB/B' FC
And 'BBB-/A-3' LC Ratings Affirmed, May 1, 2012 -- Banks: Rating Methodology and
Assumptions, Nov. 9, 2011 Ratings List Ratings Affirmed; CreditWatch/Outlook
Action To From Turkiye Garanti Bankasi A.S. Counterparty Credit Rating
BB/Stable/-- BB/Positive/-- Garanti Finansal Kiralama A.S. HSBC Bank A.S.
Turkiye Vakiflar Bankasi TAO Yapi ve Kredi Bankasi A.S. Turkiye Is Bankasi AS
Counterparty Credit Rating BB/Stable/B BB/Positive/B Ratings Affirmed HSBC Bank
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