IBCA downgrades rating for Bank Exim<\/p>\n
JAKARTA (JP): International ratings agency Fitch IBCA has
\nassigned an individual rating of \"D\" for Bank Ekspor Impor
\nIndonesia (Exim) and changed its legal rating for the bank from
\n\"2\" to \"2T.\"<\/p>\n
Fitch IBCA said Wednesday that the change of its legal rating
\nfor Bank Exim to \"2T\" indicated the potential for arising
\ntransfer risk, given the current political, economic and
\nfinancial developments in Indonesia.<\/p>\n
\"All state banks have been supported historically but the
\npossibility of the government imposing foreign exchange controls
\nmeans that there is potential for the transfer of risk of
\neconomic origin, which might prevent support for foreign currency
\ncreditors,\" the agency said.<\/p>\n
Fitch IBCA's assignment of the \"T\" suffix follows its
\ndowngrade of Indonesia's sovereign rating to noninvestment grade
\non Dec. 22.<\/p>\n
Fitch IBCA's legal ratings deal with the question of whether
\nan institution receives support from either owners or government
\nauthorities if it runs into difficulty.<\/p>\n
The individual ratings permit, on the other hand, is an
\nevaluation divorced entirely from any consideration of outside
\nsupport.<\/p>\n
Bank Exim is Indonesia's fifth largest and one of the better
\nstate-owned banks, with levels of growth and performance more
\nakin to those of the faster growing private banks.<\/p>\n
\"However, the strong performance over the past three years has
\nbeen due to drastically reduced provisions rather than revenue
\ngrowth as margins have been squeezed,\" the ratings agency said.<\/p>\n
As of last September, the bank's total capital weighted risks
\nratio was just over 9 percent, the regulatory minimum, having
\ndeclined from 12 percent at the end of 1996.<\/p>\n
Fitch IBCA said the severe depreciation of the rupiah and high
\ninterest rates since August had led to a serious deterioration in
\nthe operating environment of Indonesian banks.<\/p>\n
\"Unless interest rates come down and the rupiah stabilizes, we
\nexpect a significant number of companies to default over the
\ncoming months which will severely affect the asset quality of
\nIndonesian banks.\" (rid)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/ibca-downgrades-rating-for-bank-exim-1447893297",
"image": ""
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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