Fitch Revises 18 Turkish Banks' Outlooks to Negative on Sovereign Change

Garanti Faktoring

25/08/2016 17:29

(The following statement was released by the rating agency)

LONDON, August 25 (Fitch) Fitch Ratings has revised the Outlooks to Negative 
from Stable on18 Turkish banks, while affirming their Issuer Default Ratings 
(IDRs). 

In addition, the ratings of those banks' financial subsidiaries, which are 
driven by institutional support, are affirmed and their Outlooks are revised to 
Negative. A full list of rating actions is available at the end of this 
commentary. The rating actions follows the revision of the Outlook on Turkey's 
sovereign IDRs to Negative from Stable (see 'Fitch Affirms Turkey at 'BBB-'; 
Revises Outlook to Negative' dated 19 August 2016 at www.fitchratings.com).  

KEY RATING DRIVERS AND SENSITIVITIES - IDRS, SUPPORT RATINGS, SUPPORT RATINGS 
FLOORS (SRF), DEBT RATINGS 

The revision of the Outlooks on the Long-Term IDRs of T.C. Ziraat Bankasi A.S. 
(Ziraat), Turkiye Halk Bankasi A.S. (Halk), Turkiye Vakiflar Bankasi T.A.O. 
(Vakif), Istanbul Takas ve Saklama Bankasi A.S. - (Takasbank), Turkiye Sinai 
Kalkinma Bankasi A.S.(TSKB), Turkiye Kalkinma Bankasi A.S. (TKB) and Turkiye 
Ihracat Kredi Bankasi AS (Turk Eximbank), reflects the increased likelihood of a 
deterioration in the government's ability to provide support given the Negative 
Outlook on the sovereign rating. 

They also reflect the potential for those banks whose Viability Ratings (VR) are 
at the same level as the sovereign, to be downgraded due to the effects of a 
worsening operating environment. In the case of Takasbank, whose IDR is driven 
by its standalone creditworthiness, the Negative Outlook reflects its exposure 
purely to Turkish bank counterparty risk in the context of the deteriorating 
operating environment. 

Consequently, a downgrade of the Turkish sovereign would likely lead to a 
downgrade of the Long-Term IDRs of all seven entities. In the event that their 
Long-Term IDRs are downgraded Fitch would also expect to downgrade the banks' 
Short-Term IDRs. 

The IDRs of the seven entities are underpinned by their 'BBB-' Support Rating 
Floors, reflecting Fitch's view of a high probability of support from the 
Turkish authorities in case of need. The SRFs of Ziraat, Halk and Vakif reflect 
their (i) state ownership (ii) policy roles (Ziraat, Halk) (iii) systemic 
importance, and (iv) significant state-related deposits. 

Takasbank's SRF refects the exceptionally high systemic importance of the bank 
given its role as the country's clearing centre and, as a result of its 
interconnectedness with the financial sector, and the potential contagion risk 
in the event of a default. 

The SRFs of TSKB, TKB and Turk Eximbank reflect (i) the banks' policy roles (ii) 
majority state ownership (TKB and Turk Eximbank) and (iii) government support of 
the banks' funding. Fitch has not assigned VRs to these banks as a result of 
their policy roles and funding profiles. 

Akbank T.A.S.'s (Akbank) and Turkiye Is Bankasi A.S.'s (Isbank) IDRs are driven 
by their VRs. Their lower SRFs of 'BB-' reflect only a moderate probability of 
support from the Turkish state on account of their ownership structures while 
also taking into account the banks' systemic importance and market shares.

 

The revised Outlooks on the 'BBB' support-driven Long-Term IDRs of the 
foreign-owned commercial banks, Turkiye Garanti Bankasi A.S. (Garanti), ING Bank 
A.S. (INGBT), Turk Ekonomi Bankasi A.S. (TEB), Finansbank A.S. (Finansbank), 
ICBC Turkey Bank A.S. (ICBC Turkey), Burgan Bank A.S. (Burgan), Alternatifbank 
A.S. (ABank), and the foreign-owned participation banks Kuveyt Turk Katilim 
Bankasi A.S (Kuveyt Turk) and Turkiye Finans Katilim Bankasi AS (Turkiye 
Finans), all of which are at the level of Turkey's Country Ceiling, reflect the 
increased likelihood of a downgrade of the Country Ceiling following the change 
in the sovereign's Outlook. 

Turkey's Country Ceiling reflects transfer and convertibility risks and limits 
the extent to which support from foreign shareholders can be factored into the 
banks' Long-Term IDRs. At the same time their Local Currency IDRs, whose 
Outlooks have also been revised to Negative, continue to take into account 
Turkish country risks.

The IDRs, Support Ratings and debt ratings of all nine foreign-owned banks 
reflect Fitch's view that their parents continue to have a strong propensity to 
provide support, notwithstanding the change in sovereign outlook, given the 
subsidiaries' ownership structures, integration and, in some cases, common 
branding. 

KEY RATING DRIVERS AND SENSITIVITIES -SUBSIDIARIES OF FOREIGN OWNED BANKS

The IDRs of the Garanti Faktoring A.S., Garanti Finansal Kiralama A.S. (Garanti 
Leasing), Finans Finansal Kiralama A.S. (Finans Leasing), Alternatif Finansal 
Kiralama AS (ALease) are equalised with those of their respective parents, 
reflecting their strategic importance to and integration with their respective 
groups. 

Consequently, the revision of their Outlooks to Negative from Stable mirrors the 
rating action on their parents and indicates a possible weakening of their 
parents' ability to support them. The ratings of these entities are sensitive to 
changes in the ratings of their respective parent banks.

KEY RATING DRIVERS AND SENSITIVITIES - VRS 

The 'bbb-' VRs of Ziraat, Halk, Vakif, Garanti, TEB and Finansbank are 
unaffected as a result of the change in sovereign outlook, while the VRs of 
Takasbank, Akbank and Isbank, which drive the banks' IDRs, are affirmed. 

The operating environment and Turkish sovereign rating remain key sensitivities 
for all banks' VRs given their exposure to the domestic economy and exposure to 
investor sentiment as evidenced by the banks' high level of foreign currency 
wholesale funding. Consequently, a sovereign downgrade would likely have a 
negative impact on the banks' standalone credit profiles and lead to a downgrade 
of their VRs. Stabilisation of the sovereign's credit profile and the country's 
economic prospects would reduce downward pressure on the banks' VRs. 

The VRs of INGBT, ICBC Turkey, Burgan, ABank, Kuveyt Turk and Turkiye Finans are 
also unaffected by the sovereign outlook action. A weaker operating environment 
may have less direct or immediate impact on those banks' VRs as they are 
currently below the level of the sovereign rating and therefore have a somewhat 
greater tolerance to modest operating environment deterioration. 

KEY RATING DRIVERS AND SENSITIVITIES - SUBSIDIARIES OF DOMESTICALLY PRIVATELY 
OWNED BANKS

The IDRs of the subsidiaries of Akbank and Isbank, AK Finansal Kiralama A.S. 
(Aklease), Ak Yatirim Menkul Degerler AS (Ak Investment), Akbank AG, Is 
Faktoring A.S., Is Finansal Kiralama A.S. (Is Leasing) and Is Yatirim Menkul 
Degerler A.S. (Is Investment) are equalised with those of their respective 
parents, reflecting their strategic importance to and integration with their 
respective groups. 

Consequently, the revision of their Outlooks to Negative from Stable mirrors the 
rating action on their parents and indicates a possible weakening of their 
parents' ability to support them. The ratings of these entities are sensitive to 
changes in the ratings of their respective parent banks.

KEY RATING DRIVERS AND SENSITIVITIES - SUBORDINATED DEBT RATINGS

Vakif's and Isbank's subordinated debt ratings are notched once off their 'bbb-' 
VRs, reflecting Fitch's view that government support will not necessarily be 
extended to subordinated creditors. As such, the ratings are sensitive to 
changes in the bank's VRs. 

ABank's and Kuveyt Turk's subordinated debt ratings are notched down from their 
Long-Term Foreign Currency IDRs and as such are sensitive to changes in the 
banks' support-driven ratings, reflecting Fitch's view that support from their 
respective institutional owners would extend to subordinated creditors. 

The ratings of the notes of all four banks are also sensitive to a change in 
notching due to a change in Fitch's assessment of the probability of the notes' 
non-performance risk relative to the risk captured in their respective anchor 
ratings, or in its assessment of loss severity in case of non-performance. 

KEY RATING DRIVERS AND SENSITIVITIES - NATIONAL RATINGS 

The affirmation of all banks' and subsidiaries National Ratings with Stable 
Outlooks reflects Fitch's view that the creditworthiness of the banks relative 
to each other and to other Turkish banks has not changed significantly as a 
result of the sovereign Outlook change.

 

The rating actions are as follows: 

T.C. Ziraat Bankasi A.S.:

Long-Term Foreign and Local Currency IDRs affirmed at 'BBB-'; Outlook revised to 
Negative from Stable 

Short-Term Foreign and Local Currency IDRs affirmed at 'F3'

Viability Rating  unaffected at 'bbb-'

Support Rating affirmed at '2'

Support Rating Floor affirmed at 'BBB-'

Senior unsecured long term debt affirmed at 'BBB-'

Senior unsecured short-term debt affirmed at 'F3' 

National Long-Term Rating affirmed at 'AAA(tur)'; Outlook Stable

Turkiye Halk Bankasi A.S.:

Long-Term Foreign and Local Currency IDRs affirmed at 'BBB-'; Outlook revised to 
Negative from Stable

Short-Term Foreign and Local Currency IDRs affirmed at 'F3'

Viability Rating  unaffected at 'bbb-'

Support Rating affirmed at '2'

Support Rating Floor affirmed at 'BBB-'

Senior unsecured long term debt affirmed at 'BBB-'

National Long-Term rating affirmed at 'AAA(tur)'; Outlook Stable

Turkiye Vakiflar Bankasi T.A.O.:

Long-Term Foreign and Local Currency IDRs affirmed at 'BBB-'; Outlook revised to 
Negative from Stable

Short-Term Foreign and Local Currency IDRs affirmed at 'F3'

Viability Rating  unaffected at 'bbb-'

Support Rating affirmed at '2'

Support Rating Floor affirmed at 'BBB-'

Senior unsecured long term debt affirmed at 'BBB-'

Senior unsecured short-term debt affirmed at 'F3' 

Subordinated debt rating: affirmed at 'BB+' 

National Long-Term Rating affirmed at 'AAA(tur)'; Outlook Stable

Istanbul Takas ve Saklama Bankasi A.S. - Takasbank:

Long-Term Foreign and Local Currency IDRs affirmed at 'BBB-'; Outlook revised to 
Negative from Stable

Short-Term Foreign and Local Currency IDRs affirmed at 'F3'

Viability Rating affirmed at 'bbb-'

Support Rating affirmed at '2'

Support Rating Floor affirmed at 'BBB-'

National Long-Term rating affirmed at 'AAA(tur)'; Outlook Stable

TKB,:

Long-Term Foreign and Local Currency IDRs: affirmed at 'BBB-'; Outlook revised 
to Negative from Stable

Short-Term Foreign and Local Currency IDRs: affirmed at 'F3' 

Support Rating: affirmed at '2'

Support Rating Floor: affirmed at 'BBB-'

National Long-Term Rating: affirmed at 'AAA(tur)'; Stable Outlook

TSKB:

Long-Term Foreign and Local Currency IDRs: affirmed at 'BBB-'; Outlook revised 
to Negative from Stable

Short-Term Foreign and Local Currency IDRs: affirmed at 'F3' 

Support Rating: affirmed at '2'

Support Rating Floors: affirmed at 'BBB-'

National Long-Term Rating affirmed at 'AAA(tur)'; Stable Outlook

Senior unsecured long term debt affirmed at 'BBB-':

Senior unsecured long term debt programme affirmed at 'BBB-' 

Senior unsecured short term debt programme affirmed at 'F3'

Turk Eximbank:

Long-Term Foreign and Local Currency IDRs: affirmed at 'BBB-'; Outlook revised 
to Negative from Stable

Short-Term Foreign and Local Currency IDRs: affirmed at 'F3' 

Support Rating: affirmed at '2'

Support Rating Floor: affirmed at 'BBB-'

National Long-Term Rating: affirmed at 'AAA(tur)'; Stable Outlook

Senior unsecured long term debt affirmed at 'BBB-'

Senior unsecured debt programme affirmed at 'BBB-'

Turk Ekonomi Bankasi A.S., Finansbank A.S.:

Long-Term Foreign and Local Currency IDRs affirmed at 'BBB'; Outlook revised to 
Negative from Stable

Short-Term Foreign and Local Currency IDRs affirmed at 'F2'

Viability Rating unaffected at 'bbb-'

Support Rating affirmed at '2'

National Long-Term Rating affirmed at 'AAA(tur)'; Stable Outlook

Senior unsecured long term debt affirmed at 'BBB'

Senior unsecured short term debt affirmed at 'F2'

ING Bank A.S.:

Long-Term Foreign and Local Currency IDRs affirmed at 'BBB'; Outlook revised to 
Negative from Stable

Short-term Foreign and Local Currency IDRs affirmed at 'F2'

Viability Rating unaffected at 'bb+'

Support Rating affirmed at '2'

National Long-Term Rating affirmed at 'AAA(tur)'; Stable Outlook

Kuveyt Turk Katilim Bankasi A.S,:

Long-Term Foreign and Local Currency IDRs affirmed at 'BBB'; Outlook revised to 
Negative from Stable

Short-Term Foreign and Local Currency IDRs affirmed at 'F2'

Viability Rating unaffected at 'bb-'

Support Rating affirmed at '2'

National Long-Term Rating affirmed at 'AAA(tur)'; Stable Outlook

Senior unsecured debt (sukuk) issued by Kuvey Turk's KT Sukuk Varlik Kiralama 
A.S., KT Kira Sertifikalari Varlik Kiralama A.S. affirmed at 'BBB'

Subordinated debt issued by KT Sukuk Company Limited affirmed at 'BBB-'

Turkiye Finans Katilim Bankasi A.S.:

Long-Term Foreign and Local Currency IDRs affirmed at 'BBB'; Outlook revised to 
Negative from Stable

Short-Term Foreign and Local Currency IDRs affirmed at 'F2'

Viability Rating unaffected at 'bb-'

Support Rating affirmed at '2'

National Long-Term Rating affirmed at 'AAA(tur)'; Stable Outlook

Senior unsecured debt issues (sukuk) issued by TF Varlik Kiralama A.S. affirmed 
at 'BBB'

ICBC Turkey Bank A.S, Burgan Bank A.S.:

Long-Term Foreign and Local Currency IDRs affirmed at 'BBB'; Outlook revised to 
Negative from Stable

Short-Term Foreign and Local Currency IDRs affirmed at 'F2'

Viability Rating unaffected at 'b+'

Support Rating affirmed at '2'

National Long-Term Rating affirmed at 'AAA(tur)' Stable Outlook

Alternatifbank A.S.:

Long-Term Foreign and Local Currency IDRs affirmed at 'BBB'; Outlook revised to 
Negative from Stable

Short-Term Foreign and Local Currency IDRs affirmed at 'F2'

Viability Rating unaffected at 'b+'

Support Rating affirmed at '2'

National Long-Term Rating affirmed at 'AAA(tur)' Stable Outlook 

Guaranteed debt affirmed at 'A+'  

Subordinated debt affirmed at 'BBB-'

Alternatif Finansal Kiralama A.S.

Long-Term Foreign and Local Currency IDRs affirmed at 'BBB'; Outlook revised to 
Negative from Stable

Short-Term Foreign and Local Currency IDRs affirmed at 'F2'

Support Rating affirmed at '2'

National Long-Term Rating affirmed at 'AAA(tur)'; Stable Outlook 

Finans Finansal Kiralama A.S. 

Long-Term Foreign and Local Currency IDRs: affirmed at 'BBB'; Outlook revised to 
Negative from Stable 

Short-Term Foreign and Local Currency IDRs affirmed at 'F2'

Support Rating affirmed at '2'

National Long-Term Rating affirmed at 'AAA(tur)'; Stable Outlook

Akbank T.A.S. 

Long-Term Foreign and Local Currency IDRs: affirmed at 'BBB-'; Outlook revised 
to Negative from Stable

Short-Term Foreign and Local Currency IDRs: affirmed at 'F3' 

Viability Rating affirmed at 'bbb-'

Support Rating affirmed at '3'

Support Rating Floor affirmed at 'BB-'

National Long-Term Rating affirmed at 'AA+(tur)'; Outlook Stable 

Senior unsecured long term debt affirmed at 'BBB-'

Senior unsecured short term debt affirmed at 'F3'

Turkiye Is Bankasi A.S. 

Long-Term Foreign and Local Currency IDRs: affirmed at 'BBB-'; Outlook revised 
to Negative from Stable

Short-Term Foreign and Local Currency IDRs: affirmed at 'F3' 

Viability Rating affirmed at 'bbb-'

Support Rating affirmed at '3'

Support Rating Floor affirmed at 'BB-'

National Long-Term Rating affirmed at 'AA+(tur)'; Outlook Stable 

Senior unsecured long term debt affirmed at 'BBB-'

Senior unsecured short term debt affirmed at 'F3'

Subordinated debt affirmed at 'BB+'

Turkiye Garanti Bankasi A.S.

Long-Term Foreign and Local Currency IDRs affirmed at 'BBB'; Outlook revised to 
Negative from Stable

Short-Term Foreign and Local Currency IDRs affirmed at 'F2'

Viability Rating unaffected at 'bbb-'

Support Rating affirmed at '2' 

National Long-Term Rating affirmed at 'AAA(tur)' ; Outlook Stable

Senior unsecured long term debt affirmed at 'BBB'

Senior unsecured short term debt affirmed at 'F2' 

Akbank AG

Long-Term Foreign Currency IDR: affirmed at 'BBB-'; Outlook revised to Negative 
from Stable

Short-Term Foreign Currency IDR: affirmed at 'F3' 

Support Rating affirmed at '2'

Ak Finansal Kiralama A.S. and Ak Yatirim Menkul Degerler A.S.

Long-Term Foreign and Local Currency IDRs: affirmed at 'BBB-'; Outlook revised 
to Negative from Stable

Short-Term Foreign and Local Currency IDRs: affirmed at 'F3' 

Support Rating affirmed at '2'

National Long-Term Rating affirmed at 'AA+(tur)'; Outlook Stable

Senior unsecured debt Long-term ratings (Ak Finansal only) affirmed at 'BBB-' 

Senior unsecured debt Short-term ratings (Ak Finansal only) affirmed at 'F3' 

Is Finansal Kiralama A.S. and Is Faktoring A.S. 

Long-Term Foreign and Local Currency IDRs: affirmed at 'BBB-'; Outlook revised 
to Negative from Stable

Short-Term Foreign and Local Currency IDRs: affirmed at 'F3' 

Support Rating affirmed at '2'

National Long-Term Rating affirmed at 'AA+(tur)'; Outlook Stable 

Is Yatirim Menkul Degerler A.S.

National Long-Term Rating affirmed at 'AA+(tur)'; Outlook Stable 

Garanti Faktoring A.S. and Garanti Finansal Kiralama A.S. 

Long-Term Foreign and Local Currency IDRs: affirmed at 'BBB'; Outlook revised to 
Negative from Stable

Short-Term Foreign and Local Currency IDRs: affirmed at 'F2' 

Support Rating affirmed at '2'

National Long-Term Rating affirmed at 'AAA(tur)'; Outlook Stable

 

Contact: 

Primary Analysts 

Lindsey Liddell (Ziraat, Halk, Vakifbank, Akbank, Garanti, Kuveyt Turk, Turkiye 
Finans, ABank, ALease, Burgan, TEB, Akbank AG, Aklease, Ak Investment, Garanti 
Faktoring, Garanti Leasing) 

Director 

+44 20 3530 1008

Fitch Ratings Limited

30 North Colonnade

London E14 5GN

Aslan Tavitov (ICBC Turkey, ING Bank A.S, Finansbank, Finans Leasing, Isbank, Is 
Leasing, Is Faktoring, Is Investment)

Director

+44 20 3530 1788

Fitch Ratings Limited

30 North Colonnade

London E14 5GN

Sandra Hamilton (TKB, TSKB, TurkEximbank)

Director

+44 20 3530 1266

Fitch Ratings Limited

30 North Colonnade

London E14 5GN

Christian Kuendig (Takasbank)

Senior Director

+44 20 3530 1399

Fitch Ratings Limited

30 North Colonnade

London E14 5GN

Secondary Analysts

Lindsey Liddell (Isbank) 

Director

+44 20 3530 1008

Aslan Tavitov (Akbank, Garanti) 

Director

+44 20 3530 1788

Huseyin Sevinc (Ziraat, Halk, Vakifbank, ICBC Turkey, TKB, TSKB, Turk Eximbank,  
Is Leasing, Is Faktoring, Is Investment, Garanti Faktoring, Garanti Leasing)

Analyst

+44 20 3530 1027

Ahmet Kilinc (Kuveyt Turk, Turkiye Finans, ABank, ALease, Burgan, ING Bank A.S, 
Finansbank, Finans Leasing, TEB, Aklease, Akbank AG, AK Investment)

Analyst

+44 20 3530 1272

Evgeny Konavalov (Takasbank)

Director

+1 212 612 7839

Committee Chairperson                     

Gordon Scott 

Managing Director

+44 20 3530 1075

Media Relations: Elaine Bailey, London, Tel: +44 203 530 1153, Email: 
elaine.bailey@fitchratings.com.

Additional information is available on www.fitchratings.com

Applicable Criteria 

Criteria for Rating Sukuk (pub. 16 Aug 2016)

https://www.fitchratings.com/site/re/885806

Global Bank Rating Criteria (pub. 15 Jul 2016)

https://www.fitchratings.com/site/re/884135

Global Non-Bank Financial Institutions Rating Criteria (pub. 15 Jul 2016)

https://www.fitchratings.com/site/re/884128

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_id=1010799

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https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=1010799

Endorsement Policy 

https://www.fitchratings.com/jsp/creditdesk/PolicyRegulation.faces?context=2&det 
ail=31

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