London, 24 October 2019 -- Moody's Investors Service (Moody's) today extended its review for
downgrade on the long-term ratings of Interprombank, JSCB
(Interprombank), initiated on 24 July 2019. Moody's
also affirmed the bank's ca Baseline Credit Assessment (BCA) and
Adjusted BCA, Not Prime short-term deposit ratings,
Not Prime(cr) short-term Counterparty Risk Assessment (CRA),
and Not Prime short-term Counterparty Risk Ratings (CRRs).
A full list of affected ratings can be found at the end of this press
release.
RATINGS RATIONALE
Today's extension of the review of the bank's ratings reflects
continued uncertainty about the extent of the bank's asset impairment
and liquidity position. The focus of the review will be on governance
considerations, specifically: (1) related-party lending
affecting the performance of the bank's corporate loan book,
which, in Moody's view, mainly includes loans to companies
controlled by bank's previous shareholder, and (2) the developments
surrounding a governance-related court claim for about RUB3.5
billion recently filed in Russia. During the review, Moody's
will also focus on the future development of the bank's deposit
base, that contracted by about 25% between June and October
2019 before more recently stabilizing.
While there has been some credit deterioration since Moody's initiated
its review, risks for depositors and senior creditors are somewhat
offset by the structure of the bank's balance sheet with a large
volume of equity and subordinated debt. In addition, the
rating agency takes into account potential support that the bank might
receive from its shareholders. According to the bank's IFRS
report as of 30 June 2019, equity and subordinated debt accounted
for around 44% of the bank's total assets, offering
some protection for senior creditors and depositors in case of the bank's
failure. In addition, a large share of depositors,
being from related parties, could be converted into equity to address
the bank's solvency problems, in case of need. These
considerations explain Moody's current positioning of the bank's
Caa1 long-term ratings three notches above the bank's adjusted
BCA of ca.
WHAT COULD MOVE THE RATINGS UP/DOWN
Various actions undertaken by the bank's shareholders and management
aimed at improving the bank's liquidity and solvency could lead
to upgrade of the bank's BCA and the confirmation of the long-term
ratings. The bank's long-term ratings and its BCA
could be also upgraded in the event of a significant improvement in liquidity
and asset risk, or a successful resolution of the litigation it
faces.
Interprombank's ratings may be downgraded should the bank fail to
stabilize liquidity and solvency, were not able to resolve its litigation
favourably, or face adverse regulatory action leading to its closure
or inability to service its liabilities on a timely basis.
LIST OF AFFECTED RATINGS
Issuer: Interprombank, JSCB
Extended Review for Downgrade:
.... Long-term Counterparty Risk Assessment,
currently Caa1(cr)
.... Long-term Counterparty Risk Ratings,
currently Caa1
.... Long-term Bank Deposit Ratings,
currently Caa1, Outlook remains Rating under Review
Affirmations:
.... Baseline Credit Assessment, Affirmed
ca
.... Adjusted Baseline Credit Assessment,
Affirmed ca
.... Short-term Counterparty Risk Assessment,
Affirmed NP(cr)
.... Short-term Counterparty Risk Ratings,
Affirmed NP
.... Short-term Bank Deposit Ratings,
Affirmed NP
Outlook Action:
....Outlook remains Rating under Review
PRINCIPAL METHODOLOGY
The principal methodology used in these ratings was Banks published in
August 2018. Please see the Rating Methodologies page on www.moodys.com
for a copy of this methodology.
REGULATORY DISCLOSURES
For ratings issued on a program, series, category/class of
debt or security this announcement provides certain regulatory disclosures
in relation to each rating of a subsequently issued bond or note of the
same series, category/class of debt, security 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 credit rating action on the
support provider and in relation to each particular credit 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 credit rating action,
and whose ratings may change as a result of this credit 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.
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.
Semyon Isakov
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
Client Service: 44 20 7772 5454
Nicholas Hill
MD - Banking
Financial Institutions Group
JOURNALISTS: 44 20 7772 5456
Client Service: 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
Client Service: 44 20 7772 5454