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S&P puts Vietnam's Eximbank on CreditWatch negative

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S&P puts Vietnam's Eximbank on CreditWatch negative

Standard & Poor's Ratings Services on April 8 said itplaced the ratings of VietnamExport Import Commercial Joint Stock Bank, or Eximbank, onCreditWatch with negative implications after the local bourse added the bank toits warning list of firms suffering two years of consecutive losses.

The affected ratings are the bank's B+ long-termcounterparty credit rating and "axBB/axB" ASEAN regional scaleratings. Concurrently, S&P affirmed the bank's B short-term counterpartycredit rating.

The ratings action came after the Ho Chi Minh Stock Exchangeplaced the bank on its warning list due to posting losses for fiscals 2014 and2015. The bank reported a net loss of 817 billion dong for fiscal 2015.Meanwhile, its 2014 net profit was retroactively adjusted to a loss of 835billion dong after Vietnam's central bank discovered accounting irregularitiesat the bank.

S&P said the losses will likely strain the bank'scapital position, noting that it views the bank's aggressive accountingpractices as a credit weakness, with negative implications to the reputationand management of the bank.

In addition, S&P said it is not sure the bank willreturn to profitability in 2016 given the challenging operating environment inVietnam.

The rating agency said it could lower Eximbank's ratings ifits capitalization and earnings remain under pressure or if its asset qualitydeteriorates. It could also lower the bank's ratings if it suffers reputationaldamage or loss of confidence due to the accounting irregularities.

On the other hand, S&P could affirm the bank's ratingsif it can preserve its capitalization through a combination of earningsrecovery and continued risk asset reduction.

S&P hopes to resolve the CreditWatch placement in threemonths.

S&P Ratings andS&P Global Market Intelligence are owned by McGraw Hill Financial Inc.

As of April 8, US$1was equivalent to 22,294.50 Vietnamese dong.