Fitch Ratings has revised downwards Anadolubank A.S.'s (Anadolubank) and Arap Turk Bankasi A.S.'s (ATB) National Long-Term Ratings to 'A-(tur)' from 'A(tur)', and revised upwards Turkland Bank A.S.'s (Turkland) National Long-Term Rating to 'A(tur)' from 'BBB+(tur).

The revision follows the recalibration of Turkiye's National Rating scale, which itself follows the recent downgrade of Turkiye's Long-Term Local-Currency (LTLC) Issuer Default Rating (IDR) to 'B' from 'B+'. The Outlooks on the three banks' National Ratings are revised to Stable from Negative.

The banks' other ratings are unaffected by the recalibration.

Key Rating Drivers

The banks' National Ratings are driven by their LTLC IDRs. Anadolubank's and Arap Turk's 'B-' LTLC IDRs are driven by their standalone creditworthiness, as reflected in their 'b-' Viability Ratings (VR), while Turkland's 'B' LTLC IDR reflects potential support from Arab Bank Plc (BB/Stable).

Anadolubank's VR reflects exposure to a volatile Turkish operating environment, adequate capitalisation, resilient profitability, notwithstanding its limited franchise and small market shares, as well as contained refinancing risks.

ATB's VR reflects volatile operating environments in its core countries of operation - Turkiye and Libya, reflecting its niche trade-finance franchise with a specialist focus on the Middle East and north Africa - and risks from high credit concentrations in on- and off- balance sheets. It also reflects reliance on funding from the bank's majority shareholder, Libyan Foreign Bank, although this has been broadly reliable.

Turkland's 'B' LTLC IDR is driven by potential support from its 50% owner, Jordan-based Arab Bank Plc, reflecting the bank's ownership, but also its limited role in the Arab Bank group, weak performance and our view that Turkiye is a non-core market compared with Arab Bank's other markets. Our view of support also considers the record of support from the bank's other 50% owner, BankMed Sal.

The revision of the National Rating Outlooks to Stable from Negative reflects our view that their creditworthiness in local currency relative to that of other Turkish issuers is stable.

Revision ratings are to modify ratings for reasons that are not related to credit quality and reflect changes in the National Rating scale driven purely by the recalibration of Fitch's National Ratings Correspondence Table.

National ratings are a measure of relative credit risk among issuers in a country designed to help local investors differentiate risk. Turkiye's National Ratings are denoted by the unique identifier '(tur)'. National scales are not comparable with Fitch's international ratings scales or with other countries' national rating scales. For more details, see ' Fitch Ratings Recalibrates Turkiye's National Rating Scale', dated 4 August 2022 on www.fitchratings.com.

Rating Sensitivities

Factors that could, individually or collectively, lead to negative rating action/downgrade:

The National Ratings of Anadolubank, ATB and Turkland are sensitive to a downgrade of their LTLC IDRs.

The National Ratings of Anadolubank and ATB are also sensitive to a weakening of their creditworthiness in local currency relative to other Turkish issuers with a 'B-' LTLC IDR.

The National Rating of Turkland is also sensitive to a weakening of its creditworthiness in local currency relative to other Turkish issuers with a 'B' LTLC IDR.

Factors that could, individually or collectively, lead to positive rating action/upgrade:

The National Ratings of Anadolubank, Turkland and ATB are sensitive to an upgrade of their LTLC IDRs.

The National Rating of Turkland is sensitive to a stronger creditworthiness in local currency relative to other Turkish issuers with a 'B' LTLC IDR.

REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING

The principal sources of information used in the analysis are described in the Applicable Criteria.

Public Ratings with Credit Linkage to other ratings

All banks included in this review have ratings linked to the Turkish sovereign rating, given the ratings either rely on or are sensitive to our assessment of sovereign support or country risks. Turkland has ratings linked to its parent bank's ratings.

RATING ACTIONS

Entity / Debt

Rating

Prior

Turkland Bank A.S.

Natl LT

A(tur)

Revision Rating

BBB+(tur)

Arap Turk Bankasi A.S.

Natl LT

A-(tur)

Revision Rating

A(tur)

Anadolubank A.S.

Natl LT

A-(tur)

Revision Rating

A(tur)

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VIEW ADDITIONAL RATING DETAILS

Additional information is available on www.fitchratings.com

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