Fitch Ratings-London/Moscow-20 November 2008: Fitch Ratings has today revised its rating Outlooks on the Moscow Bank for Reconstruction and Development (MBRD – ‘B+’) and Dalcombank (DCB – ‘B+’) to Negative from Stable. A full list of rating actions on both Russian banks is provided at the end of this announcement.
The Outlook revisions for MBRD and Dalcombank follow a revision of the rating Outlook on Sistema Joint Stock Financial Corp. (Sistema - ‘BB-’((BB minus)) today to Negative from Stable (see 20 November 2008 announcement on the agency’s subscriber website, www.fitchresearch.com). Sistema is the majority shareholder of MBRD and the 100%-owner of Dalcombank. MBRD and Dalcombank’s ratings, which have been affirmed, reflect Fitch’s view of the strong propensity of Sistema to provide support to the banks in case of need. However, the Negative Outlooks on the banks reflect the possibility that Sistema’s ability to provide support could be hampered in future.
Fitch notes that MBRD’s liquidity position has not come under heightened pressure during recent weeks, having been supported by increased customer balances of Sistema’s subsidiaries (customer accounts have increased 30% since the end of September 2008). Dalcombank experienced a marked tightening of liquidity at the beginning of October following a deposit run (see 9 October 2008 Fitch announcement, “Fitch Affirms Dalcombank at ‘B+’; Outlook Stable”, available on the agency’s subscriber website, www.fitchresearch.com), but received support from MBRD at that time and customer account balances have since stabilised. The agency also notes that both banks have access to funds offered by Russia’s Central Bank.
MBRD is a medium-sized Russian bank, 95%-owned by Sistema. Servicing the needs of Sistema remains an important part of MBRD’s business, but the bank is also developing a third-party customer franchise and diversifying into the retail segment.
DCB is a small-sized Russian bank based in Khabarovsk with a broad presence in other regions of far east Russia. The bank engages in corporate and retail lending and is 100%-owned by Sistema.
Rating actions as follows:
MBRD
Long-term Issuer Default rating (IDR): affirmed at ‘B+'; Outlook revised to Negative from Stable
Short-term IDR: affirmed at 'B'
Individual: affirmed at 'D/E'
Support: affirmed at '4'
National Long-term: affirmed at 'A-(A minus)(rus)'; Outlook revised to Negative from Stable
DCB
Long-term IDR: affirmed at 'B+'; Outlook revised to Negative from Stable
Short-term IDR: affirmed at 'B'
Individual: affirmed at 'E'
Support: affirmed at '4'
National Long-term: affirmed at 'A-(A minus)(rus)'; Outlook revised to Negative from Stable
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