S&P expects merger of two Kazakh banks

27 June 2018 12:07 (UTC+04:00)

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S&P Global Ratings said today that it raised its long-term issuer credit rating on Kazkommertsbank (KKB) to 'BB' from 'B+' and removed the rating from CreditWatch with positive implications where it was placed on Dec. 22, 2017.

The outlook is stable.

“We also revised the outlook on Halyk Savings Bank of Kazakhstan (Halyk Bank) to stable from negative, and affirmed our long-term ratings on the bank at 'BB'. At the same time, we affirmed the 'B' short-term issuer credit ratings on both banks,” said the rating agency.

S&P also raised our Kazakhstan national scale rating on Halyk Bank to 'kzA+' from 'kzA'. “We raised our Kazakhstan national scale rating on KKB to 'kzA+' from 'kzBBB-' and removed it from CreditWatch positive.”

“The rating actions follow the announcement that Halyk Bank has received approval from the National Bank of Kazakhstan to proceed with the merger of KKB into Halyk Bank. Shareholders of both banks have approved the merger and the giving up of KKB's banking licence. Preparations for the merger, in terms of cost optimization and the integration of information systems and processes, have been progressing as planned. We therefore expect the banks will merge in the third quarter of 2018 and believe that the merger is almost certain.”

Consequently, S&P now views KKB as a core subsidiary of Halyk Bank and expects Halyk Bank will provide support to KKB under any foreseeable circumstances in the next few months prior to the legal merger. “We therefore equalize our ratings on Halyk Bank and KKB. On the completion of the merger, we will likely discontinue the ratings on KKB, and KKB will transfer all its obligations to Halyk Bank.”

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