Turkiye G.ads4a Share News (39IS)

Fri, 4th May 2012 18:06

(The following statement was released by the rating agency)



Overview

-- On May 1, 2012, we revised our outlook on the Republic of Turkey to

stable from positive, reflecting our concern that less-buoyant external demand

and worsening terms of trade could inhibit Turkey's economic rebalancing.

-- We are therefore revising the outlooks on six Turkish financial

institutions to stable from positive.

-- The stable outlooks reflect that on the sovereign. Turkish banks'

financial performance and fundamentals will remain highly correlated with

sovereign creditworthiness through their significant holdings of government

securities, and exposure to the domestic environment.



Rating Action

On May 4, 2012, Standard & Poor's Ratings Services revised its outlooks to

stable from positive on the long-term counterparty credit ratings on six

Turkish financial institutions:

-- Turkiye Garanti Bankasi A.S. (Garanti),

-- Garanti Finansal Kiralama A.S. (Garanti Leasing),

-- HSBC Bank A.S.,

-- Turkiye Is Bankasi A.S. (Isbank),

-- Turkiye Vakiflar Bankasi T.A.O. (VakifBank), and

-- 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 A.S.

Turkiye Is Bankasi AS

Turkiye Vakiflar Bankasi TAO

Yapi ve Kredi Bankasi A.S.

National Scale Rating trAA/--/trA-1



NB. Does not include all ratings affected





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Primary Credit Analyst: Goeksenin Karagoez, Paris (33) 1-4420-6724;

goeksenin_karagoez@standardandpoors.com

Secondary Contact: Magar Kouyoumdjian, London (44) 20-7176-7217;

magar_kouyoumdjian@standardandpoors.com

Additional Contact: Financial Institutions Ratings Europe;

FIG_Europe@standardandpoors.com





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Time USN User Headline

04/05/2012 WNA6 WE S&P REVISES OTLK ON SIX TURKISH

12:32:52 83 SCRIP FINANCIAL INSTITUTIONS TO STBL

Overview -- On May 1, 2012, we revised our outlook on the Republic of Turkey to

stable from positive, reflecting our concern that less-buoyant external demand

and worsening terms of trade could inhibit Turkey's economic rebalancing. -- We

are therefore revising the outlooks on six Turkish financial institutions to

stable from positive. -- The stable outlooks reflect that on the sovereign.

Turkish banks' financial performance and fundamentals will remain highly

correlated with sovereign creditworthiness through their significant holdings of

government securities, and exposure to the domestic environment. Rating Action

On May 4, 2012, Standard & Poor's Ratings Services revised its outlooks to

stable from positive on the long-term counterparty credit ratings on six Turkish

financial institutions: -- Turkiye Garanti Bankasi A.S. (Garanti), -- Garanti

Finansal Kiralama A.S. (Garanti Leasing), -- HSBC Bank A.S., -- Turkiye Is

Bankasi A.S. (Isbank), -- Turkiye Vakiflar Bankasi T.A.O. (VakifBank), and --

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

A.S. Turki

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