PACRA DOWNGRADES RATINGS OF

CRESCENT INVESTMENT BANK LTD. (CRESBANK)

 

Lahore: October 12, 2001

The Pakistan Credit Rating Agency (PACRA) has downgraded both the long-term and short-term entity ratings assigned to CresBank to 'BB+' (double B plus) and 'B' (single B), respectively. The ratings will continue to be on RatingWatch.

The ratings were placed on the RatingWatch on 2nd October 2001 pending formulation and outcome of the management's strategy to arrange the requisite liquidity to meet its obligations. According to the latest information received from management, the bank expects to make adequate financing arrangements. However, as indicated by management, the success of such arrangements is dependent on the stock market behaviour which continues to show volatility. Considering the impairment in risk absorption capacity of the bank emanating from the erosion in equity and elevated gearing, uncertainties surrounding the resolution of liquidity problems and, pending the finalization of a definite strategy of capital restructuring, the ratings are downgraded. This rating action also reflects PACRA's concern about the lack of timely support from the bank's sponsors. PACRA would review the ratings as soon as the outcome of the management's efforts and plans becomes known.