"We base our ratings on Kapital Bank on our 'bb-' anchor for a commercial bank operating only in Azerbaijan. The anchor is our starting point for deriving an issuer credit rating," the agency said. 

"The ratings reflect our view of Kapital Bank's good business diversity and solid market positions. Our assessment also reflects the bank's adequate capital buffer with good loss absorption capacity in the challenging Azeri environment. The bank's market share of nearly 5% of total systemwide assets and 8% of retail deposits is significant in the context of Azerbaijan's very concentrated banking system. 

"The bank's competitive position benefits from its legacy as a savings bank during the Soviet era and provides it with a large retail-deposit client base. We view the bank as having "high" systemic importance in a "supportive" regime, which is a rating positive factor."