The agency said: “The outlook revision reflects our anticipation that Amirbank is unlikely to expand its franchise at the levels we previously anticipated. This is attributable to the bank’s failure to obtain a foreign currency license in 2013 and to register its Qarshi-based branch, contrary to its plans.”

“Growth during the first nine months of 2013 was sluggish at 4.8%, based on financials prepared in accordance with Uzbek generally accepted accounting principles. This was significantly lower than the bank’s planned growth of over 30%. This lag in growth largely stemmed from the bank’s prolonged inability to obtain regulatory capital of €5 million and its consequent failure to obtain a foreign currency license and open a branch in the Qarshi region,” Standard & Poor’s said.

“In our view, the bank’s underperformance relative to its planned strategy is likely to continue in the near term. Despite plans to accumulate additional capital through the partial sale of subsidiary leasing companies, which would allow the bank to reach the regulatory threshold of €5 million, we believe that the Central Bank of Uzbekistan’s willingness to issue a license is low, and the possibility of an issuance is remote,” the agency underlined.

“We also note that capital injections, although necessary for Amirbank to comply with a presidential decree, have been difficult to complete in the past. We assume that failure to obtain a foreign currency license, which is very important for Uzbek banks, alongside the increased presence of other private banks in the Samarqand region, may undermine the bank’s franchise. We therefore believe that the bank’s capacity to improve its business and financial profile is more remote than we previously expected,” Standard & Poor’s said.

“The ratings on Amirbank reflect the bank’s “weak” business position, “very strong” capital and earnings, “weak” risk position, “below-average” funding, and “adequate” liquidity, as our criteria define these terms. The stand-alone credit profile is ‘ccc’,” the agency underlined.

Standard & Poor’s said: “The stable outlook reflects our forecast of a slowdown in Amirbank’s business development. We also expect the bank will maintain its strong capitalization and adequate liquidity over the next 12-24 months.”

“We could consider raising the ratings if the bank succeeds in obtaining a foreign currency license and improves its business diversity and the quality of its revenues base, while continuing to gradually improve its risk management and operational capacity and maintaining capitalization at strong levels,” the agency underlined.

“We may revise outlook to negative if we see continued underperformance relative to the bank’s planned strategy. We may also consider a negative rating action if the current liquidity cushion declines significantly so that it hurts the bank’s solvency, or if the projected risk-adjusted capital ratio fell below 10%, which we would no longer view as strong,” Standard & Poor’s stated.