Moody's Assigns Counterparty Risk Assessments To 15 Turkish Banks

- Moody's Investors Service has assigned counterparty risk (CR) assessments to 15 Turkish banks, in line with its revised bank rating methodology.

"The CR assessment, which is not a rating, reflects an issuer's probability of defaulting on certain bank operating liabilities, such as derivatives, letters of credit and other contractual commitments" Moody's said in a statement on Friday.

"In assigning the CR assessment, Moody's evaluated the issuer's standalone strength and the likelihood, should the need arise, of affiliate and government support, as well as the anticipated seniority of counterparty obligations under Moody's Loss Given Failure framework."

The CR assessment also assumed that authorities would likely take steps to preserve the continuity of a bank's key operations, maintain payment flows and avoid contagion should the bank enter a resolution, the statement said.

In most cases, the starting point for the CR assessment was one notch above the bank's adjusted baseline credit assessment (BCA), to which Moody's then typically added the same notches of government support uplift as applied to deposit and senior unsecured debt ratings, according to the Moody's statement.

"As a result, the CR assessment for most Turkish banks is at the same level as the senior debt and deposit ratings, reflecting Moody's view that authorities are likely to honor the operating obligations the CR assessment refers to in order to preserve a bank's critical functions and reduce potential for contagion" it said.

The subordinated debt ratings were linked to the banks' adjusted BCAs, it said. "Therefore, any upward or downward movement in the ratings could develop following either the raising or lowering of the adjusted BCAs for these banks."

The banks has been assigned counterparty risk (CR) assessments were listed as; Akbank, Bank Asya, Burgan Bank, Denizbank, HSBC Bank, ING Bank, Sekerbank, Ziraat Bankasi, Turk Ekonomi Bankasi, Turkiye Garanti Bankasi, Turkiye Halk Bankasi, Turkiye Is Bankasi, Turkiye Sinai Kalkinma Bankasi, Turkiye Vakiflar Bankasi and Yapi ve Kredi Bankasi.