PRESS RELEASE: Fitch Affirms EBRD AAA
Fitch Ratings-London/Paris-27 October 2009: Fitch Ratings has today affirmed
the European Bank for Reconstruction and Development's (EBRD) Long-term Issuer
Default Rating (IDR) at 'AAA' with a Stable Outlook, and affirmed its Short-term
IDR at 'F1+'. The ratings reflect the strong support from the EBRD's member
countries, its conservative risk management policies and sound financial
structure.
The EBRD's capital is held by 61 states and two EU institutions. Support takes
the form of unpaid capital, which accounts for three-quarters of subscribed
shares and can be called if needed. At end-2008, 83.9% of callable capital was
owned by shareholders rated at least 'AA-'. Given the credit ratings of the
bank's shareholders, Fitch believes that support would be provided if necessary.
The bank's mission is to provide financing to countries in central and eastern
Europe (CEE) and the Commonwealth of Independent States (CIS). The EBRD
concentrates on the private sector which accounted for 86.5% of operating assets
at end-2008 (loans: 58.7%; guarantees: 1.7%; equity participations: 25.9%). Its
exposure to credit risk is well diversified: the five largest borrowers equated
to only 5.7% of the EBRD's equity at end-2008, which is well below the average
for multilateral development banks (MDBs).
Because of its exposure to CEE and CIS private sectors, the EBRD has been
particularly affected by the global economic crisis. It recorded a loss of
EUR0.6bn in 2008 which was mainly due to the drop in equity values across the
region. IFRS rules led the bank to record a write down of EUR2.6bn, of which
EUR1.4bn directly from shareholders' equity. It has also taken provisions of
EUR0.1bn on its treasury operations. There was no fair value adjustment in H208
on debt securities which have been reclassified to the loan portfolio in
accordance with an amendment to IAS 39. The quality of the loan portfolio has
not been significantly affected by the economic downturn to end-2008. Impaired
loans increased to 1.16% of loans in 2008 from 0.4% in 2007 and are largely
covered by provisions (2.1% of loans at end-2008,). This reflects the bank's
conservative risk management policies and preferred creditor status.
As with other MDBs, the EBRD has been called by the international community to
provide financing to countries affected by the economic crisis and will increase
financing in the region by more than 50% in 2009. As of now, the EBRD's capital
is sufficient to allow for the additional lending volume. The substantial gains
recorded in 2006 and 2007 from the revaluation of equity had been kept in
reserve, and capitalisation has not been affected by the 2008 loss. The EBRD's
shareholders are considering an increase of the bank's capital by EUR10bn in
order to allow for a more rapid growth in lending.
The EBRD is an MDB founded in 1990 to facilitate the transition of the CEE and
CIS region to market economies and multi-party political regimes. Its financing
takes the form of project loans, equity investments and guarantees. The bank is
based in London and employed 1,581 staff at end-2008.
Contacts: Eric Paget-Blanc, Paris, Tel: +33 1 44 29 91 33; Richard Fox,
London, Tel: +44 (0) 20 7417 4357.
Media Relations: Peter Fitzpatrick, London, Tel: + 44 (0)20 7417 4364, Email:
peter.fitzpatrick@fitchratings.com.
Additional information is available at www.fitchratings.com.
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(END) Dow Jones Newswires
10-27-091247ET
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