The IDRs reflect UB's weak credit profile due to its modest franchise, high concentration risks on both sides of the balance sheet, large volume of related-party transactions and expected rapid balance sheet expansion in the near- to medium- term.

The ratings also take into account weaknesses in Uzbekistan's operating environment and high operating costs associated with the overall development of the bank's business. The bank's liquidity position is also potentially vulnerable due to its reliance on corporate settlement accounts. However, the bank's reported capitalisation is reasonable.

Privately-owned UB is one of the smallest (24th of 30) domestic banks by assets (end-2011: USD27.4m), based in densely populated eastern Uzbekistan where it operates a few banking outlets. The bank has a short track record as it was founded only in 2001. In late 2010, a regional private equity investment fund acquired control of UB. UB focuses on commercial banking operations with predominantly corporate clients. The new owner is focused on franchise expansion and building management processes and controls.

The rating actions are as follows:
Long-Term Foreign Currency IDR: affirmed at 'CCC'
Short-Term Foreign Currency IDR: affirmed at 'C'
Long-Term Local Currency IDR: affirmed at 'CCC'
Short-Term Local Currency IDR: affirmed at 'C'
Viability Rating: affirmed at 'ccc'
Support Rating: Affirmed at '5'
Support Rating Floor: affirmed at 'No Floor'