Yerevan/Mediamax/. Fitch Ratings has downgraded ACBA-Credit Agricole Bank\'s (ACBA) Long-term Issuer Default Rating (IDR) to \'BB-\' from \'BB\'. The Outlook is Stable.

The bank\'s Viability Rating (VR) has been affirmed at \'b+\', Short-term IDR - affirmed at \'B\', Individual Rating - affirmed at \'D\' and Support Rating - affirmed at \'3\', Mediamax reports quoting Fitch Ratings. 

The downgrade of ACBA\'s Long-term IDR reflects the agency\'s reassessment of the probability of support from its shareholder Credit Agricole S.A. (CA; \'AA-\'/RWN). “In its assessment, Fitch now places greater emphasis on factors which it had previously identified as constraining the probability of support”, - agency’s message reads.

“These factors include the fact that the Armenian market is not of strategic importance for CA, the minority (28%) stake held by CA, and CA\'s limited presence in other emerging markets, meaning ACBA\'s performance, and hypothetical default, would bear little contagion risk for the rest of the group”, - Fitch says, mentioning at the same time, that support for ACBA from CA has never been required, or therefore tested, in the past given ACBA\'s sound financial position.
 
ACBA\'s IDRs and Support Rating continue to reflect the limited probability of support from CA, given the brand association, the track record of cooperation with CA and ACBA\'s small size (and hence potential cost of support). Future revisions of ACBA\'s IDRs will likely be driven by any changes in Fitch\'s view of CA\'s propensity to provide assistance to ACBA in case of need. Any downward revision of Armenia\'s sovereign rating, implying a higher risk of systemic stress, could also result in a downgrade of ACBA.

ACBA\'s VR considers recent rapid growth, increased loan concentrations and still high loan dollarisation (57% of end-Q311 loans), exposing the bank to indirect market risk in case of a national currency devaluation. At the same time, the rating reflects low levels of non-performing loans, sound liquidity and manageable refinancing risks, strong profitability and capitalisation (Basel II total capital ratio of 20.8% at end-Q311) as well as the bank\'s broad domestic franchise.

At end-Q311, ACBA was Armenia\'s largest bank by total assets (nearly 11% of the system\'s assets) with sizeable market shares of around 50% in agricultural lending and 14% in consumer lending. CA\'s 28% stake is owned in part directly and in part indirectly; the remainder is distributed among 10 regional agricultural unions.