London, 11 June 2015 -- Moody's Investors Service, (Moody's) has today assigned Counterparty
Risk Assessments (CR Assessments) to 34 Russian banks. This announcement
follows the publication of the rating agency's revised bank rating methodology
(see "Banks" published on 16 March 2015).
Concurrently, Moody's affirmed the ratings of Gazprombank,
Home Credit & Finance Bank, CB Renaissance Credit LLC,
Khanty-Mansiysk Bank Otkritie PJSC, Bank of Moscow and MTS
Bank PJSC. The outlooks on the long-term deposit and senior
unsecured debt ratings remain negative for all six banks. Moody's
has also withdrawn, for its own business reasons, the outlooks
on these banks' subordinated debt ratings. Please refer to
Moody's Investors Service's Policy for Withdrawal of Credit
Ratings available on its website, www.moodys.com.
Please click here to access Moody's revised bank rating methodology
("Banks," published on 16 March 2015) https://www.moodys.com/research/Banks--PBC_179038.
RATINGS RATIONALE
--GAZPROMBANK
The affirmation of Gazprombank's b1 baseline credit assessment (BCA),
b1 adjusted BCA, Ba2 long-term local and foreign-currency
deposit ratings and Not-Prime short-term foreign-currency
deposit rating, Ba2 senior unsecured debt and B2 subordinated debt
rating reflects adequate liquidity and funding position of Gazprombank,
with only limited refinancing requirements in 2015-16.
At the same time, Moody's notes the bank's growing problem
loans (calculated as per Moody's standard approach as corporate impaired
loans and retail overdue 90+ days loans), which worsened to
13.3% of gross loans as of year-end 2014 relative
to only around 2% as of year-end 2013 driven by recognition
of a few large impaired loans in Ukraine and Russia. Also,
the bank's already modest net income has weakened in 2014 compared with
the previous year, and the current operating environment will put
pressure on the bank's profitability over the next 12-18 months.
In turn, the bank's capital adequacy ratio, although sufficient
to absorb anticipated base case losses, declined to 10.7%
as of year-end 2014 from 13.2% at end-2013.
Moody's, however, expects that the Russian state authorities
will inject additional capital into the bank in 2015, which will
help to absorb potential losses stemming from deteriorating asset quality.
As the third-largest systemically important bank, Gazprombank's
long-term local and foreign-currency debt and local-currency
deposit ratings continues to benefit from two notches of systemic support
uplift from its BCA.
---HOME CREDIT & FINANCE BANK
The affirmation of Home Credit & Finance Bank's b2 baseline
credit assessment (BCA), b2 adjusted BCA, B2/Not-Prime
local and foreign-currency deposit ratings, (P)B2 senior
unsecured debt and B3 subordinated debt ratings reflects (1) the bank's
asset-quality pressures (as its problem loans accounted for 15.6%
of total loans as of year-end 2014), which stem from the
bank's exposure to its single business line, consumer lending in
Russia (Ba1 negative) exacerbated by the deteriorated operating environment
in Russia; and (2) the bank's weakening profitability (with return
on average assets of -1.3% as of year-end
2014) and its historically rapid loan book growth in the past, which
heightens the likelihood of potential future losses in future.
At the same time, the ratings are supported by (1) adequate capitalization
with capital adequacy ratio of 24.4% and Tier 1 capital
ratio of 17% as of year-end 2014; and (2) adequate
funding and liquidity positions. The long-term deposit and
senior unsecured debt ratings do no benefit from any government support
uplift.
---CB RENAISSANCE CREDIT LLC
The affirmation of Commercial Bank "Renaissance Credit" LLC b3 BCA,
b3 adjusted BCA, B3/Not-Prime local and foreign-currency
deposit ratings, B3 senior unsecured debt and Caa1 subordinated
debt ratings reflects (1) the bank's monoline specialisation in consumer
lending in Russia exacerbated by the deteriorated operating environment
in Russia; (2) weak asset quality with problem loans accounting for
21.1% of total loans as of year-end 2014; (3)
its loss-making performance (with return on average assets of around
-13% as of year-end 2014) and only a limited probability
of returning to profit over next 12-18 months; (4) capital
support from CBRC's key shareholder (ONEXIM) as reflected in recent capital
injections and still strong Basel total capital ratio of 17.0%
at year-end 2014; and (5) an adequate retail funding base
in conjunction with a stable liquidity position. The long-term
deposit and senior unsecured debt ratings do no benefit from any government
support uplift.
--KHANTY-MANSIYSK BANK OTKRITIE PJSC
The affirmation of Khanty-Mansiysk bank Otkritie's (KhMBO)
b2 BCA, b1 adjusted BCA, B1/Not-Prime local and foreign-currency
deposit ratings, and B3 (hyb) subordinated debt ratings reflects
the bank's adequate funding and liquidity profile (cash instruments
accounted for 33% as of year-end 2014 under IFRS),
as well as the benefits it derives from its strengthened market position
and historically solid customer franchise in the region of Khanty-Mansiysk
AO (Ba2, negative). At the same time, the ratings are
constrained by (1) the deteriorated operating environment in Russia,
which pressures bank's financial fundamentals; (2) worsening
asset quality both in retail and corporate loan books with NPLs (overdue
more than 90 days) amounting to 6.9% at year-end
2014 (2% in 2013) under audited IFRS, (3) heightened credit
risk profile given the recent merger with Bank Otkritie, which formerly
focused on unsecured consumer loans (60% of loans as of 30 June
2014); and (3) weakening profitability and capitalisation on the
back of higher credit costs, narrowing margins and negative revaluation
of securities. Regulatory total capital adequacy ratio amounted
to 11.7% as of 1 May 2015.
The rating agency incorporates a high probability of affiliate support
from Bank Otkritie Financial Corporation PJSC (deposits/senior unsecured
Ba3, negative, BCA b1), resulting in one notch of uplift
from the bank's b2 BCA. This is based on the parent's
ultimate majority ownership, the close strategic fit and importance
of KhMBO to the consolidated financial position of BOFC.
KhMBO's long-term deposit ratings do no benefit from any
government support uplift.
--- BANK OF MOSCOW
The affirmation of Bank of Moscow b2 BCA, ba2 adjusted BCA,
ratings Ba2 long-term local and foreign-currency deposit
ratings and Not-Prime short-term foreign-currency
deposit rating, Ba2 senior unsecured debt and B1 subordinated debt
rating reflects (1) challenging credit conditions in Russia that exert
pressure on the bank's asset quality, profitability and capital
adequacy; (2) the bank's comfortable liquidity profile, supported
by stable deposit-based funding; and (3) a diversified business
profile with a strong position in the highly competitive Moscow region.
Bank of Moscow's performance in 2014 was already negatively affected
by growing credit costs with provisioning expenses accounted for 3%
of average loan book in 2014 resulting in 90% drop of net income
with RoAA of 0.1% and RoE of 1.3% (down from
2.6% and 18.7%, respectively,
a year before). The standalone BCA is also compromised by the bank's
status under a government-led financial rehabilitation programme
- i.e., the bank is not in full compliance
with the statutory requirements if the necessary loan-loss provisions
are applied. Moody's expects this status to last until 30
June 2015. In addition, the standalone BCA is constrained
by the bank's significantly impaired asset quality, which results
in modest profitability from stable sources, as approximately 20%
of the loan book is not accruing interest.
The rating agency incorporates a high probability of affiliate support
from Bank VTB, JSC (deposits Ba2 negative/senior unsecured Ba1 negative,
BCA b1), given BOM's deep integration into VTB Group - as
its 96% subsidiary - and the significant contribution BOM
makes to the group's financial results. At the same time,
Moody's believes that the majority of support will be ultimately
provided by the sovereign, given the bank's importance to the Moscow
region and the banking system as a whole.
Bank of Moscow's long-term deposit and senior unsecured debt
ratings do no benefit from any government support uplift in addition to
its affiliate support uplift.
--- MTS Bank PJSC
The affirmation of MTS Bank PJSC's (MTSB) b3 BCA, b2 adjusted
BCA, B2/Not-Prime local and foreign-currency deposit
ratings and B3 subordinated debt rating reflects the bank's weak asset
quality with overdue over 30 days loans accounted for over 26%
of the bank's loan book as at year-end 2014, while
growing credit costs have already resulted in loss-making performance
in 2014. Furthermore, whilst MTSB reports consistently strong
capital adequacy ratios with Tier 1 capital adequacy ratio (CAR) of 17.82%
and total CAR of 25.52% as at 1 January 2015, it has
become increasingly dependent on capital support from its shareholders,
a less reliable form of support. At the same time, Moody's
acknowledges that MTSB's BCA is supported by (1) the bank's partnership
with a sister company Mobile TeleSystems OJSC (Ba1 corporate family rating,
on review for downgrade); (2) ample liquidity buffer; and (3)
lower risk appetite in unsecured consumer lending and overall improvement
of risk profile. The latter is demonstrated by a reduced single-name
borrower concentration and the improved business model and transparency
of MTSB's 66%-owned subsidiary East-West United Bank
S.A.
The rating agency incorporates a moderate probability of affiliate support
to MTSB from JSFC Sistema (B1 CFR, negative) in case of need.
MTS's long-term deposit ratings do not benefit from any government
support uplift.
WHAT COULD CHANGE THE RATINGS UP/DOWN
The negative outlooks on these banks' long-term deposit and
debt ratings imply that upward rating pressure is limited. The
outlook on the long-term ratings could be changed to stable if
the banks improve their profitability and asset-quality metrics,
while increasing their capital levels or maintaining them at adequate
levels.
Downward rating pressure could emerge if (1) the already unfavorable operating
environment in Russia further deteriorates, putting additional systemic-wide
pressure on the banks' asset quality, profitability and capital
adequacy ratios; and/or (2) the individual financial performance
of the abovementioned banks becomes detrimental for their credit profiles.
---CR ASSESSMENTS
Moody's has also assigned CR Assessments to 34 banks. CR Assessments
are opinions of how counterparty obligations are likely to be treated
if a bank fails, and are distinct from debt and deposit ratings
in that they (1) consider only the risk of default rather than expected
loss and (2) apply to counterparty obligations and contractual commitments
rather than debt or deposit instruments. The CR Assessment is an
opinion of the counterparty risk related to a bank's covered bonds,
contractual performance obligations (servicing), derivatives (e.g.,
swaps), letters of credit, guarantees and liquidity facilities.
For Russian banks, the CR Assessment is positioned, prior
to government support, one notch above the Adjusted BCA and therefore
above senior unsecured and deposit ratings, reflecting Moody's
view that its probability of default is lower than that of senior unsecured
debt and deposits. Moody's believe that senior obligations
represented by the CR Assessment will be more likely preserved in order
to limit contagion, minimize losses and avoid disruption of critical
functions.
For 4 Russian banks, the CR Assessments also benefit from government
support in line with Moody's support assumptions on deposits and
senior unsecured debt. This reflects Moody's view that any
support provided by governmental authorities to a bank which benefits
senior unsecured debt or deposits is very likely to benefit operating
activities and obligations reflected by the CR Assessment as well,
consistent with Moody's belief that governments are likely to maintain
such operations as a going-concern in order to reduce contagion
and preserve a bank's critical functions. The remaining 30 CR Assessments
do not benefit from any government support, in line with our support
assumptions on deposits and senior unsecured debt. This reflects
our view that operating activities and obligations reflected by the CR
Assessment are unlikely to benefit from any support provisions from resolution
authorities to senior unsecured debt or deposits.
At the same time, the rating agency assigned Prime-3(cr)
short-term CR Assessments to ING Bank Eurasia and Rusfinance Bank,
and Not-Prime(cr) short-term CR Assessments to the other
32 banks.
The principal methodology used in these ratings was Banks published in
March 2015. Please see the Credit Policy page on www.moodys.com
for a copy of this methodology.
List of affected ratings
Assignments:
..Issuer: Agency for Housing Mortgage Lending OJSC
.... Counterparty Risk Assessment, Assigned
Ba1(cr)
.... Counterparty Risk Assessment, Assigned
NP(cr)
..Issuer: Akibank
.... Counterparty Risk Assessment, Assigned
B2(cr)
.... Counterparty Risk Assessment, Assigned
NP(cr)
..Issuer: AK BARS Bank
.... Counterparty Risk Assessment, Assigned
B1(cr)
.... Counterparty Risk Assessment, Assigned
NP(cr)
..Issuer: Autotorgbank
.... Counterparty Risk Assessment, Assigned
B2(cr)
.... Counterparty Risk Assessment, Assigned
NP(cr)
..Issuer: Baltinvestbank
.... Counterparty Risk Assessment, Assigned
B2(cr)
.... Counterparty Risk Assessment, Assigned
NP(cr)
..Issuer: Bank of Moscow
.... Counterparty Risk Assessment, Assigned
Ba1(cr)
.... Counterparty Risk Assessment, Assigned
NP(cr)
..Issuer: Bank ZENIT PJSC
.... Counterparty Risk Assessment, Assigned
Ba3(cr)
.... Counterparty Risk Assessment, Assigned
NP(cr)
..Issuer: CB Renaissance Credit LLC
.... Counterparty Risk Assessment, Assigned
B2(cr)
.... Counterparty Risk Assessment, Assigned
NP(cr)
..Issuer: Center-Invest Bank
.... Counterparty Risk Assessment, Assigned
Ba3(cr)
.... Counterparty Risk Assessment, Assigned
NP(cr)
..Issuer: Commercial Bank Agropromcredit (LLC)
.... Counterparty Risk Assessment, Assigned
B1(cr)
.... Counterparty Risk Assessment, Assigned
NP(cr)
..Issuer: Commercial Bank OBRAZOVANIE
.... Counterparty Risk Assessment, Assigned
B2(cr)
.... Counterparty Risk Assessment, Assigned
NP(cr)
..Issuer: CREDIT BANK OF MOSCOW
.... Counterparty Risk Assessment, Assigned
Ba3(cr)
.... Counterparty Risk Assessment, Assigned
NP(cr)
..Issuer: Derzhava
.... Counterparty Risk Assessment, Assigned
B2(cr)
.... Counterparty Risk Assessment, Assigned
NP(cr)
..Issuer: Evrofinance Mosnarbank
.... Counterparty Risk Assessment, Assigned
Ba3(cr)
.... Counterparty Risk Assessment, Assigned
NP(cr)
..Issuer: Far Eastern Bank
.... Counterparty Risk Assessment, Assigned
Ba3(cr)
.... Counterparty Risk Assessment, Assigned
NP(cr)
..Issuer: Gazbank JSCB
.... Counterparty Risk Assessment, Assigned
B2(cr)
.... Counterparty Risk Assessment, Assigned
NP(cr)
..Issuer: Gazprombank
.... Counterparty Risk Assessment, Assigned
Ba1(cr)
.... Counterparty Risk Assessment, Assigned
NP(cr)
..Issuer: Home Credit & Finance Bank
.... Counterparty Risk Assessment, Assigned
B1(cr)
.... Counterparty Risk Assessment, Assigned
NP(cr)
..Issuer: ING Bank Eurasia
.... Counterparty Risk Assessment, Assigned
Baa3(cr)
.... Counterparty Risk Assessment, Assigned
P-3(cr)
..Issuer: Interprombank, JSCB
.... Counterparty Risk Assessment, Assigned
B2(cr)
.... Counterparty Risk Assessment, Assigned
NP(cr)
..Issuer: Khanty-Mansiysk bank Otkritie PJSC
.... Counterparty Risk Assessment, Assigned
Ba3(cr)
.... Counterparty Risk Assessment, Assigned
NP(cr)
..Issuer: Maritime Bank
.... Counterparty Risk Assessment, Assigned
B2(cr)
.... Counterparty Risk Assessment, Assigned
NP(cr)
..Issuer: Metallurgical Commercial Bank
.... Counterparty Risk Assessment, Assigned
B1(cr)
.... Counterparty Risk Assessment, Assigned
NP(cr)
..Issuer: MTS Bank PJSC
.... Counterparty Risk Assessment, Assigned
B1(cr)
.... Counterparty Risk Assessment, Assigned
NP(cr)
..Issuer: NBD Bank
.... Counterparty Risk Assessment, Assigned
Ba3(cr)
.... Counterparty Risk Assessment, Assigned
NP(cr)
..Issuer: Novikombank JSC Bank
.... Counterparty Risk Assessment, Assigned
B1(cr)
.... Counterparty Risk Assessment, Assigned
NP(cr)
..Issuer: OTP Bank (Russia), OJSC
.... Counterparty Risk Assessment, Assigned
Ba2(cr)
.... Counterparty Risk Assessment, Assigned
NP(cr)
..Issuer: Pervobank JSC
.... Counterparty Risk Assessment, Assigned
B2(cr)
.... Counterparty Risk Assessment, Assigned
NP(cr)
..Issuer: Petrocommerce Bank (OJSC)
.... Counterparty Risk Assessment, Assigned
B1(cr)
.... Counterparty Risk Assessment, Assigned
NP(cr)
..Issuer: Rosdorbank
.... Counterparty Risk Assessment, Assigned
B2(cr)
.... Counterparty Risk Assessment, Assigned
NP(cr)
..Issuer: Rusfinance Bank
.... Counterparty Risk Assessment, Assigned
Baa3(cr)
.... Counterparty Risk Assessment, Assigned
P-3(cr)
..Issuer: Russian International Bank
.... Counterparty Risk Assessment, Assigned
B2(cr)
.... Counterparty Risk Assessment, Assigned
NP(cr)
..Issuer: Russian Regional Development Bank
.... Counterparty Risk Assessment, Assigned
Ba2(cr)
.... Counterparty Risk Assessment, Assigned
NP(cr)
..Issuer: Tatfondbank
.... Counterparty Risk Assessment, Assigned
B1(cr)
.... Counterparty Risk Assessment, Assigned
NP(cr)
Affirmations:
..Issuer: Bank of Moscow
.... Adjusted Baseline Credit Assessment,
Affirmed ba2
.... Baseline Credit Assessment, Affirmed
b2
....LT Bank Deposits, Affirmed Ba2 Negative
.... ST Bank Deposits, Affirmed NP
....Senior Unsecured Regular Bond/Debenture,
Affirmed Ba2 Negative
....Subordinate Regular Bond/Debenture,
Affirmed B1
....Senior Unsecured Medium-Term Note
Program, Affirmed (P)Ba2
..Issuer: CB Renaissance Credit LLC
.... Adjusted Baseline Credit Assessment,
Affirmed b3
.... Baseline Credit Assessment, Affirmed
b3
.....LT Bank Deposits, Affirmed
B3 Negative
.... ST Bank Deposits, Affirmed NP
....Senior Unsecured Medium-Term Note
Program, Affirmed (P)B3
....Other Short Term, Affirmed (P)NP
....Subordinate Medium-Term Note Program,
Affirmed (P)Caa1
....Subordinate Regular Bond/Debenture,
Affirmed Caa1
....Senior Unsecured Regular Bond/Debenture,
Affirmed B3 Negative
..Issuer: Gazprombank
.... Adjusted Baseline Credit Assessment,
Affirmed b1
.... Baseline Credit Assessment, Affirmed
b1
.....LT Bank Deposits, Affirmed
Ba2 Negative
.... ST Bank Deposits, Affirmed NP
....Subordinate Medium-Term Note Program,
Affirmed (P)B2
....Senior Unsecured Medium-Term Note
Program, Affirmed (P)Ba2
....Subordinate Regular Bond/Debenture,
Affirmed B2
....BACKED Senior Unsecured Regular Bond/Debenture,
Affirmed Ba2 Negative
....Senior Unsecured Regular Bond/Debenture,
Affirmed Ba2 Negative
..Issuer: Home Credit & Finance Bank
.... Adjusted Baseline Credit Assessment,
Affirmed b2
.... Baseline Credit Assessment, Affirmed
b2
.....LT Bank Deposits, Affirmed
B2 Negative
.... ST Bank Deposits, Affirmed NP
....BACKED Senior Unsecured Medium-Term
Note Program, Affirmed (P)B2
....Subordinate Medium-Term Note Program,
Affirmed (P)B3
....Other Short Term, Affirmed (P)NP
....Subordinate Regular Bond/Debenture,
Affirmed B3
..Issuer: Khanty-Mansiysk bank Otkritie PJSC
.... Adjusted Baseline Credit Assessment,
Affirmed b1
.... Baseline Credit Assessment, Affirmed
b2
.... LT Bank Deposits, Affirmed B1 Negative
.... ST Bank Deposits, Affirmed NP
....Subordinate Regular Bond/Debenture,
Affirmed B3 (hyb)
..Issuer: MTS Bank PJSC
.... Adjusted Baseline Credit Assessment,
Affirmed b2
.... Baseline Credit Assessment, Affirmed
b3
.... LT Bank Deposits, Affirmed B2 Negative
.... ST Bank Deposits, Affirmed NP
....Subordinate Regular Bond/Debenture,
Affirmed B3
..Issuer: Kuznetski Capital S.A.
....BACKED Subordinate Regular Bond/Debenture,
Affirmed B1
Outlook Actions:
..Issuer: Bank of Moscow
....Outlook, Remains Negative
..Issuer: CB Renaissance Credit LLC
....Outlook, Remains Negative
..Issuer: Gazprombank
....Outlook, Remains Negative
..Issuer: Home Credit & Finance Bank
....Outlook, Remains Negative
..Issuer: Khanty-Mansiysk bank Otkritie PJSC
....Outlook, Remains Negative
..Issuer: MTS Bank PJSC
....Outlook, Remains Negative
..Issuer: Kuznetski Capital S.A.
....Outlook, Remains Negative
REGULATORY DISCLOSURES
For ratings issued on a program, series or category/class of debt,
this announcement provides certain regulatory disclosures in relation
to each rating of a subsequently issued bond or note of the same series
or category/class of debt or pursuant to a program for which the ratings
are derived exclusively from existing ratings in accordance with Moody's
rating practices. For ratings issued on a support provider,
this announcement provides certain regulatory disclosures in relation
to the rating action on the support provider and in relation to each particular
rating action for securities that derive their credit ratings from the
support provider's credit rating. For provisional ratings,
this announcement provides certain regulatory disclosures in relation
to the provisional rating assigned, and in relation to a definitive
rating that may be assigned subsequent to the final issuance of the debt,
in each case where the transaction structure and terms have not changed
prior to the assignment of the definitive rating in a manner that would
have affected the rating. For further information please see the
ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.
For any affected securities or rated entities receiving direct credit
support from the primary entity(ies) of this rating action, and
whose ratings may change as a result of this rating action, the
associated regulatory disclosures will be those of the guarantor entity.
Exceptions to this approach exist for the following disclosures,
if applicable to jurisdiction: Ancillary Services, Disclosure
to rated entity, Disclosure from rated entity.
The following information supplements Disclosure 10 ("Information
Relating to Conflicts of Interest as required by Paragraph (a)(1)(ii)(J)
of SEC Rule 17g-7") in the regulatory disclosures made at
the ratings tab on the issuer/entity page on www.moodys.com
for each credit rating as indicated:
Moody's was not paid for services other than determining a credit
rating in the most recently ended fiscal year by the person(s) that paid
Moody's to determine this credit rating.
The below contact information is provided for information purposes only.
Please see the ratings tab of the issuer page at www.moodys.com,
for each of the ratings covered, Moody's disclosures on the
lead analyst and the Moody's legal entity that has issued the ratings.
Regulatory disclosures contained in this press release apply to the credit
rating and, if applicable, the related rating outlook or rating
review.
Please see www.moodys.com for any updates on changes to
the lead rating analyst and to the Moody's legal entity that has issued
the rating.
Please see the ratings tab on the issuer/entity page on www.moodys.com
for additional regulatory disclosures for each credit rating.
Alexander Proklov
Vice President - Senior Analyst
Financial Institutions Group
Moody's Investors Service Limited, Russian Branch
7th floor, Four Winds Plaza
21 1st Tverskaya-Yamskaya St.
Moscow 125047
Russia
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454
Yves Lemay
MD-Banking & Sovereign
Financial Institutions Group
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454
Releasing Office:
Moody's Investors Service Ltd.
One Canada Square
Canary Wharf
London E14 5FA
United Kingdom
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454
Moody's assigns Counterparty Risk Assessments to 34 Russian banks; affirms 6 banks' ratings