Moody's on Dec. 15 downgraded the long-term foreign-currency senior unsecured debt and long-term local-currency deposit ratings on Türkiye Halk Bankasi AS to Ba2 from Ba1. The outlook was maintained at negative.
Also downgraded were the baseline and adjusted baseline credit assessments, to "b1" from "ba2." The rating agency attributed the downgrade to the lender's reliance on short-term liabilities and its rapid lending growth, which has exerted pressure on Halkbank's capital ratios.
The rating agency affirmed the bank's long-term foreign-currency deposit rating at Ba2 and the long- and short-term counterparty risk assessments at Ba1(cr)/NP(cr). The bank's long-term foreign-currency deposit rating remains constrained by the country ceiling, Moody's noted.
The negative outlook on the bank's long-term senior unsecured debt and deposit ratings reflects the negative outlook on the Turkish government rating, the rating agency said, adding that Halkbank's involvement in legal proceedings related to its former deputy CEO could affect its ratings.
In March, U.S. prosecutors arrested Mehmet Hakan Atilla, a deputy general manager at Halkbank, on charges of conspiring to commit bank fraud and violating U.S. sanctions against Iran. His trial in New York is ongoing.
