International rating agency Standard & Poor's has lowered MDM Bank's long-term counterparty credit rating from B+ to B, affirming its short-term rating at B. The ratings carry a negative outlook. Furthermore, the lender's national scale rating was cut from ruA to ruBBB+.
As the agency noted, as MDM Bank's share in the Russian banking sector's total assets fell from 1.2% as of year-end 2010 to 0.4% as of year-end 2014 the agency decided to revise its assessment of the bank's importance for the banking system from average to low. Consequently, the rating no longer includes additional notches related to the likelihood of urgent support to be provided by the government, if necessary, to the bank. As other rating factors remain the same, the assessment of the bank's autonomous creditworthiness was affirmed at b. Meanwhile, the agency's analysts specified that the bank's rating reflects its creditworthiness on an independent basis, they take into account additional support that MDM Bank gets from its new owners, B&N Bank shareholders.
The negative outlook for MDM Bank's rating reflects continuing pressure on its ability to generate profit and the asset quality due to deteriorating economic conditions in Russia.
