Moody's on March 31 placed a negative outlook on Belarus'banking system.

The decision was driven by the government's limited supportcapacity and the country's worsening operating environment.It is in keeping with Moody's negative outlooks on all Belarusian banks ratedby the agency, as well as Moody's negative outlook on Belarus' Caa1 governmentbond rating.

The agency added that it expects the banking system'scapital adequacy ratio to decline to 13.5% over the next 18 months, withnonperforming loans projected to reach almost 8% of total loans within twoyears.