International rating agency Fitch Ratings has affirmed its long-term Issuer Default Ratings (IDR) on Ak Bars Bank and Almazergienbank at BB- and Kraiinvestbank at B. All the ratings carry a stable outlook.
The ratings of the three banks reflect Fitch’s opinion about the potential of support of regional authorities, as required, given that majority stakes in these banks are held by these authorities (indirectly, as far as Ak Bars Bank is concerned) and operating control over the banks, and also the track record of capital and liquidity support until present. Furthermore, Ak Bars Bank’s ratings take into account the bank’s substantial market share in the Republic of Tatarstan, and while Almazergienbank’s ratings take into account its modest size compared to the Republic of Yakutia’s budget. At the same time, Fitch assesses the likelihood of support as moderate for each of the three banks and, for this reason, their ratings are lower than those of their parent companies.
Almazergienbank’s ratings could be downgraded in case of a cut in the Republic of Yakutia’s ratings. The stable rating outlook for Kraiinvestbank and Ak Bars Bank reflect the agency’s expectations that even in case of a one-notch downgrade of the parent companies’ IDRs (the outlook of which is negative), for example, in the event of a sovereign rating downgrade, the banks’ ratings would remain at their relatively low levels. However, should the ratings of relevant regions be cut by several notches (which the agency does not forecast at the moment), the banks’ ratings will likely be lowered. Almazergienbank’s ratings could also be cut if Fitch changes its viewpoint about the Republic of Yakutia’s readiness to support the bank ahead of a scheduled reduction in the region’s equity stake and/or if the bank is sold to a company with much weaker creditworthiness.
For rating upgrades at Ak Bars Bank and Kraiinvestbank the rating outlook for their parent companies needs to be revised to stable and corporate governance regarding the banks’ high-risk assets should improve. The potential of Almazergienbank’s rating upgrade is limited as the authorities plan to reduce their holding in the bank.
