Fitch Places 28 Russian Banks on Watch Positive & Watch Evolving
Fitch Ratings-London/Moscow-05 March 2010: Fitch Ratings has today placed 13 privately-owned Russian banks on Rating Watch Positive (RWP), placed 14 banks and one leasing company on Rating Watch Evolving (RWE), and revised the Rating Watch on one bank to Evolving from Negative. A full rating breakdown is provided at the end of this comment.
The rating actions reflect the potential for future rating upgrades following the better-than-expected performance of the Russian banking sector during the global economic crisis. In particular, the actions take account of the strengthening of certain aspects of market infrastructure during the crisis, most notably in respect to banks' ability to access liquidity, in case of need.
The resolution of the rating watches and decisions on potential rating upgrades will be made following reviews of the current financial position and prospects of each individual bank, and any upgrades will in most cases likely be limited to one notch. Fitch expects to complete these reviews within the next three months.
Fitch has placed the ratings of the following 13 banks, which previously had Stable Outlooks, on RWP: Alfa-Bank ('BB-'), MDM Bank ('BB-'), Nomos-Bank ('B+'), Evrofinance Mosnarbank ('B'), International Industrial Bank ('B'), National Reserve Bank ('B'), Roseurobank ('B'), Centrocredit Bank ('B-'), Chelindbank ('B-'), Petersburg Social Commercial Bank ('B-'), Bank Rossiya ('B-'), Russian Universal Bank ('B-') and SDM-Bank ('B-'). The positive rating watches reflect Fitch's expectation that a majority of these banks' ratings will be upgraded following the completion of the reviews.
The 14 banks and one leasing company whose ratings have been placed on RWE, and which previously had Negative Outlooks, are: Promsvyazbank ('B+'), Russian Standard Bank ('B+'), Bank Uralsib ('B+'), Uralsib Leasing Group ('B+'), Bank Zenit ('B+'), Credit Bank of Moscow ('B'), Locko-bank ('B'), Central Commercial Bank ('B-'), International Bank of St. Petersburg ('B-'), Primsotsbank ('B-'), SKB-Bank ('B-'), Bank Snezhinskiy ('B-'), Spurt Bank ('B-'), Uraltransbank ('B-') and BTA-Kazan ('CCC'). Probusinessbank, which was previously on Rating Watch Negative, has also been placed on RWE. The RWE on these entities reflects the potential for some of them to be upgraded as a result of the upcoming reviews.
However, there is also a significant probability in respect to each of these entities that ratings will be affirmed at current levels, and Negative Outlooks may again be assigned if Fitch remains concerned that certain banks' current loss absorption capacity could be insufficient relative to asset quality problems being faced.
The performance of the Russian banking sector during the financial crisis has been better than Fitch would have expected pre-crisis in two important respects. Firstly, certain aspects of market infrastructure have been strengthened considerably during the crisis. This has been most notable in respect to banks' ability to access liquidity from the Central Bank of Russia through unsecured facilities, repo transactions and pledging of non-trading assets.
In addition, mechanisms have been put in place to manage bank failures in a more orderly way, thus reducing contagion risks for other banks in the sector, and larger institutions can currently apply to the government for tier 1 capital injections. Although it remains to be seen whether in a post-crisis environment the Russian authorities would always rescue individual banks in the way seen in H208, Fitch believes that banks' improved access to liquidity will survive the current crisis and remain available in case of broad systemic stress in the future.
Secondly, Fitch notes that a large majority of rated banks look set to survive the major asset quality stress posed by the crisis without requiring emergency capital support from shareholders or the Russian authorities. Although Fitch does not rule out the possibility of asset quality-driven bank failures in 2010, the agency currently expects these to be at most isolated cases, and notes that access to capital support from the Russian authorities could help to limit or prevent creditor losses in respect to such banks.
The rating actions are as follows:
OJSC Alfa-BankLong-term Issuer Default Rating (IDR): 'BB-'; placed on Rating Watch PositiveSenior unsecured debt: 'BB-'; placed on Rating Watch PositiveSubordinated debt: 'B+', placed on Rating Watch Positive Short-term IDR: affirmed at 'B'Individual Rating: 'D';
placed on Rating Watch PositiveSupport Rating: affirmed at '4'Support Rating Floor: affirmed at 'B' National Long-term Rating: 'A+(rus)';
placed on Rating Watch Positive
MDM Bank (OJSC)Long-term foreign and local currency IDRs: 'BB-'; placed on Rating Watch PositiveSenior unsecured debt: 'BB-'; placed on Rating Watch PositiveSubordinated debt: 'B+', placed on Rating Watch PositiveShort-term IDR: affirmed at 'B'Individual Rating: 'D'; placed on Rating Watch PositiveSupport Rating: affirmed at '4'Support Rating Floor: affirmed at 'B' National Long-term Rating: 'A+(rus)';
placed on Rating Watch Positive
NOMOS-BANKLong-term IDR: 'B+'; placed on Rating Watch PositiveSenior unsecured debt: 'B+'; placed on Rating Watch Positive; Recovery Rating at 'RR4'Subordinated debt: 'B-'; placed on Rating Watch Positive; Recovery Rating at 'RR6'Short-term IDR: affirmed at 'B'Individual Rating: affirmed at 'D' Support Rating: affirmed at '5'Support Rating Floor: affirmed at 'B-'National Long-term Rating: 'A(rus)';
placed on Rating Watch Positive
PromsvyazbankLong-term IDR: 'B+'; placed on Rating Watch EvolvingSenior unsecured debt: 'B+'; placed on Rating Watch Evolving; Recovery Rating at 'RR4'Subordinated debt: 'B-'; placed on Rating Watch Evolving; Recovery Rating at 'RR6'Short-term IDR: affirmed at 'B'Individual Rating: affirmed at 'D'Support Rating: affirmed at '4'Support Rating Floor: affirmed at 'B'
JSC Russian Standard BankLong-term IDR: 'B+'; placed on Rating
Watch EvolvingSenior unsecured debt: 'B+'; placed on Rating
Watch EvolvingShort-term IDR: affirmed at 'B'Individual Rating: affirmed at 'D' Support Rating: affirmed at '5'Support Rating Floor: affirmed at 'No Floor'
Bank UralsibLong-term IDR: 'B+'; placed on Rating Watch EvolvingShort-term IDR: affirmed at 'B'Individual Rating: affirmed at 'D'Support Rating: affirmed at '4'Support Rating Floor: affirmed at 'B'
Uralsib Leasing GroupLong-term foreign and local currency IDRs: 'B+'; placed on Rating Watch EvolvingShort-term IDR: affirmed at 'B'Support Rating: '4';
placed on Rating Watch Positive
Bank ZenitLong-term IDR: 'B+'; placed on Rating Watch EvolvingShort-term IDR: affirmed at 'B'Individual Rating: affirmed at 'D' Support Rating: affirmed at '5'Support Rating Floor: affirmed at 'No Floor'National Long-term Rating: 'A-(rus)';
placed on Rating Watch Evolving
Evrofinance Mosnarbank Long-term foreign currency IDR: 'B'; placed on Rating Watch PositiveShort-term foreign currency IDR: affirmed at 'B'Individual Rating: affirmed at 'D'Support Rating: affirmed at '5'Support Rating Floor: affirmed at 'No Floor'National Long-term Rating: 'BBB(rus)';
placed on Rating Watch Positive
International Industrial BankLong-term foreign currency IDR: 'B'; placed on Rating Watch PositiveSenior unsecured debt: 'B'; placed on Rating Watch Positive; Recovery Rating at 'RR4'Short-term foreign currency IDR: affirmed at 'B'Individual Rating: affirmed at 'D' Support Rating: affirmed at '5'Support Rating Floor: affirmed at 'No Floor'National Long-term Rating: 'BBB(rus)';
placed on Rating Watch Positive
National Reserve Bank Long-term foreign currency IDR: 'B'; placed on Rating Watch PositiveShort-term foreign currency IDR: affirmed at 'B'Individual Rating: affirmed at 'D' Support Rating: affirmed at '5'Support Rating Floor: affirmed at 'No floor'National Long-term Rating: 'BBB-(rus)';
placed on Rating Watch Positive
Rosevrobank Long-term foreign currency IDR: 'B'; placed on Rating Watch PositiveShort-term foreign currency IDR: affirmed at 'B'Individual Rating: affirmed at 'D' Support Rating: affirmed at '5'Support Rating Floor: affirmed at 'No floor'National Long-term Rating: 'BBB-(rus)';
placed on Rating Watch Positive
Credit Bank of MoscowLong-term foreign currency IDR: 'B'; placed on Rating Watch EvolvingShort-term foreign currency IDR: affirmed at 'B'Individual Rating: affirmed at 'D' Support Rating: affirmed at '5'Support Rating Floor: affirmed at 'No Floor'National Long-term Rating: 'BBB-(rus)';
placed on Rating Watch Evolving
Locko-bankLong-term foreign and local currency IDRs: 'B'; placed on Rating Watch EvolvingShort-term foreign currency IDR: affirmed at 'B'Individual Rating: affirmed at 'D'Support Rating: affirmed at '5'Support Rating Floor: affirmed at 'No Floor'National Long-term Rating: 'BBB-(rus)';
placed on Rating Watch Evolving
CentroCredit BankLong-term foreign currency IDR: 'B-'; placed on Rating Watch PositiveShort-term foreign currency IDR: affirmed at 'B'Individual Rating: 'D/E'; placed on Rating Watch PositiveSupport Rating: affirmed at '5'Support Rating Floor: affirmed at 'No Floor'National Long-term Rating: 'BB-(rus)',
placed on Rating Watch Positive
ChelindbankLong-term IDR: 'B-'; placed on Rating Watch PositiveShort-term IDR: affirmed at 'B'Individual Rating: 'D/E'; placed on Rating Watch PositiveSupport Rating: affirmed at '5'Support Rating Floor: affirmed at 'No floor'National Long-term Rating: 'BB(rus)';
placed on Rating Watch Positive
Petersburg Social Commercial BankLong-term IDR: 'B-'; placed on Rating Watch PositiveShort-term IDR: affirmed at 'B'Individual Rating: 'D/E'; placed on Rating Watch PositiveSupport Rating: affirmed at '5'Support Rating Floor: affirmed at 'No floor'National Long-term Rating: 'BB-(rus)'; placed on Rating Watch Positive |
