Moody’s Investors Services has placed Bank of Georgia and TBC on review for a possible downgrade of their D- bank financial strength rating, and Ba1 long-term local currency deposit rating.
Moody’s has also changed TBC Bank’s outlook on its foreign currency deposit rating of B3 to negative from stable. Similarly, it has changed Bank of Georgia’s outlook on foreign currency deposit rating of B3 and foreign currency debt rating of Ba2 to negative.
These rating actions have been provoked by the military conflict between Georgia and Russia. The agency cautions that prolonged hostilities could result in material damage to the Georgian economy and financial sector, deterring foreign direct investment that has been a key growth driver in recent years.
According the agency, it has already resulted in a halt on bank lending.
Moody's rating review will focus on assessing the impact of the conflict on the overall financial position of the banks, particularly on their liquidity profiles, asset quality indicators and economic solvency, which in turn may lead to multi-notch downgrades of the banks' local currency deposit ratings.
Both banks are headquartered in Tbilisi. Bank of Georgia had total assets of US$1.9bn at the end of 2007, while TBC Bank had total assets of US$1.1bn at the end of last year.
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