International rating agency Moody’s Investors Service has downgraded its long-term foreign and local currency deposit ratings and its local currency debt rating on Petrocommerce from B1 to B2. The outlook for the long-term ratings is stable.
As the agency noted in a press release, the downgrade of the bank’s ratings was driven, first, by its weak financial showings (a Rub 9.7 bln loss under IFRS in FY13 because of bad loan provisions, while before-reserves profit was modest) and, second, by deteriorated capital adequacy.
Moody’s affirmed its short-term foreign and local currency ratings on the bank at Not Prime. Petrocommerce’ BFSR was affirmed at E+, a stable outlook, which equals baseline credit assessment of b2 (previously b1).
The agency’s estimates take into account the planned assignment of control at Petrocommerce to Otkritie Holding. The upward revision of the long-term rating outlook to stable reflects the agency’s opinion that the bank’s new shareholders would continue to support the bank and would also help it cut bad loans.
In addition, Moody’s affirmed its long-term local and foreign currency deposit ratings and its local currency senior unsecured debt rating on Russlavbank at B3 on the global scale. The bank’s BFSR was affirmed at E+ (which corresponds to the baseline credit assessment of b3). The outlook for the lender’s BFSR of E+ and long-term deposit and debt ratings of B3 is negative.
Affirmation of Russlavbank’s ratings reflects stabilization of its liquidity position. Moody’s is also positive about the financial institution’s plan to draw a Rub 1 bln subordinated loan, which should maintain its liquidity and reserves, until the end of August.
The negative outlook for the bank’s ratings reflects the agency’s assessment of the risks associated with lower profit and poor asset quality.
