Fitch upgrades Azerbaijani Accessbank to 'BBB-'

The upgrade of AB's Long-term IDR, Short-term IDR and SR reflects Fitch's reassessment of the likelihood of support that the bank may receive from its core international financial institution (IFI) shareholders, the rating agency said in a statement.

Fitch has reassessed its view of the propensity and willingness of the core shareholders to provide support to AB given (i) its development mandate as a microfinance bank and the IFIs' strategic commitment to microfinance lending in developing markets; (ii) the IFIs' direct ownership of AB, stemming from their participation as founding shareholders of the bank; (iii) the significant integration of IFI guidelines into AB's risk-management and corporate governance frameworks; (iv) AB's still small size and limited scale, which limits the cost of any potential support for IFIs; v) reputation risk for the IFIs in case of AB's default; and (vi) Fitch's understanding that a full exit of the IFIs from the bank over the next few years is relatively unlikely.

At the same time, Fitch notes some uncertainty with respect to timely support always being provided to AB, if needed, given the fragmented nature of the shareholder structure; the limited overall strategic importance of the small microfinance bank for its IFI owners and their intention to gradually decrease their stakes in the bank in the longer term. The European Bank for Reconstruction and Development (AAA/Stable), KfW (AAA/Stable), International Finance Corporation and the Black Sea Trade and Development Bank each hold a direct 20% stake in AB, and a 16.5% stake is held by AccessHolding, in turn also controlled by IFIs.

The upgrade of AB is in line with the recent upgrades of ProCredit Holding AG and some of its subsidiary banks (see "Fitch Upgrades ProCredit Holding and

ProCredit Banks in Bulgaria and Romania" dated June 25 on www.fitchratings.com), which also reflected a revised assessment of potential support from IFI

shareholders for the ProCredit group's microfinance lending operations.