Moody's on Dec. 22 affirmed AS Expobank's B1 long-term deposit rating and changed the outlook on the rating to negative from stable.
The rating agency also affirmed the bank's "b1" baseline credit assessment and adjusted baseline credit assessment and its Ba3(cr) long-term counterparty risk assessment.
The outlook revision reflects potential pressure on Expobank's business volumes and earnings in a tightening regulatory environment around money laundering controls in Latvia. Moody's does not believe the bank is at risk of violating any regulatory requirements, but tighter controls will likely increase compliance costs and lengthen the time required to conduct due diligence for certain transactions that the bank's business is largely dependent upon.
Increased controls can also lower demand for the affected financial services, potentially reducing customer deposit and transaction flows or making it more difficult to conduct cross-border business with correspondent banks, according to the agency.
The bank's Not-Prime short-term deposit rating and its Not-Prime(cr) short-term counterparty risk assessment remain unaffected.