ACLEDA facing possible ratings downgrade: Moody's

Photo by: TRACEY SHELTON
ACLEDA Bank’s head office on Monivong Boulevard in Phnom Penh. One of Cambodia’s largest banks with branches in neighbouring Laos, ACLEDA may face a downgrade on its local currency long-term deposit rating by Moody’s, the credit-risk ratings agency said Wednesday

The Phnom Penh Post
http://www.phnompenhpost.com

Written by George McLeod
Friday, 22 May 2009

US-based credit-risk agency says that local currency long-term deposit and issuer ratings may be lowered based on Cambodia’s financial climate

ACLEDA may face a downgrade of its local currency long-term deposit and issuer ratings, according to the US-based credit-risk agency Moody's.

The bank's current long-term deposit rating of Ba1 will be reassessed, while the financial strength rating will remain unchanged at D, it said Wednesday.

Moody's issued a statement saying that the review could lead to a "possible downgrade" of the long-term deposit rating, but that other ratings would be unaffected and "carry a stable outlook".

Moody's Singapore office was unavailable for further comment on Thursday.

ACLEDA Vice Chairman John Brinsden said that the review did not reflect weaknesses in the bank's overall position.

"This is a standard Moody's practice - it doesn't mean there will be a change in the [financial-strength] rating," he said.

He added that the review had more to do with the ability of the National Bank of Cambodia to support private banking in the face of a rapidly expanding sector, and that the rating only referred to local currency debt.

Moody's said in the statement it would "review the specific circumstances of Cambodia to determine the appropriate systemic support available for Cambodian bank ratings and the implications for ACLEDA Bank, which has been identified as being potentially affected".

ACLEDA is one of Cambodia's largest banks, with more than US$700 million in assets as of March. The company has 229 branches, and is the first Cambodian bank to have expanded to Laos.

The review of ACLEDA'S standing comes after Moody's lowered the Bank Financial Strength Rating of Korea's Kookmin Bank from C to C- on Wednesday. Kookmin opened its first branch in Phnom Penh this month.