Russian rating agency AK&M has revised its outlook for the creditworthiness rating on Ulyanovsk-based Bank Venets from stable to negative, keeping its rating at В++ (Sublevel 2).
As the agency noted in a press release, the downward revision of the rating outlook was driven by substantial growth of the bank's reputation and regulatory risks due to tax violations committed by one of its shareholders. The agency thinks that illegal actions taken by a person who tangibly controls the bank under the IFRS could cause negative reaction on the part of its customers and partners. AK&M believes that the odds of events taking a negative turn for the bank are fairly high, the agency noted.
The person, with whom the bank's reputation risk is associated, was not named in the agency's press release. Presumably, the man could be Mikhail Rodionov, a member of the Legislative Assembly of the Ulyanovsk region, whose family holds over 49% of the bank's shares. Twice this year already the Investigative Committee of Russia in the Ulyanovsk region has reported about investigative actions taken under a case of tax dodging by Dimitrovgrad Meat Products Combine (Dicom), including about searches at the combine itself and two breweries of Zavod Trekhsosensky, the director and owner of which, based on the data in the Unified State Register of Legal Entities, is Rodionov. Specifically, this April the Investigative Committee reported on searches conducted on the basis of court rulings "at office premises of the companies and at the office of the director, a member of the Legislative Assembly of the Ulyanovsk region". Due to a new twist in searches Rodionov told Kommersant in July that at present he has nothing to do with Dicom.
Furthermore, AK&M downgraded Sotsinvestbank's national scale creditworthiness rating from A (Sublevel 3) to B++ (Sublevel 1). The rating carries a stable outlook.
The B++ rating means that the bank is classified as a class of borrowers with the satisfactory level of creditworthiness, the risk associated with untimely fulfillment of the obligations is modest, the odds of restructuring its debt or the part of it are moderate, AK&M noted in a press release.
The lending institution's rating downgrade was caused by its aggressive policy towards retail deposits, falling diversification in terms of sources of funding, the low amount of highly liquid assets, the moderate quality of its inter-bank loans, the agency specified in the press release.
