Standard & Poor’s rating services keeps Vozrozhdenie Bank’s long-term ratings at “ВВ-”

20 November 2015

Standard & Poor’s rating services keeps the bank’s long- and short-term credit ratings at “BB-/B” on the global scale and “ruAA-” on the Russia national scale, maintaining its CreditWatch with negative implications. The ratings were put on CreditWatch on August 24, 2015 when V.Bank’s faced uncertainties related to its future business strategy after recent material changes in the bank’s ownership.

Standard & Poor’s analysts highlight tough operating conditions for Russian banks as well as the lack of clarity on the new strategy and any potential dramatic change in Vozrozhdenie Bank’s historically moderate risk appetite and prudent strategy, which have enabled it to report stable healthy operating profits in recent years.

“Because of its track record of sound core banking profitability and its strong franchise in the rich and diversified Moscow region, we currently consider Vozrozhdenie Bank’s business position to be ‘adequate’. Whether the new controlling shareholder will change this and a shift in strategy might weaken the bank’s business position remains to be seen,” noted Sergey Voronenko, Associate Director at Standard & Poor’s rating services.

The agency would affirm the bank’s ratings if potential changes in its ownership structure do not markedly affect its strategy or risk appetite and the bank’s self-sustained capital generation or additional capital from the new shareholder offset possible losses.

At the same time the bank’s long-term ratings could be lowered in case if its funding profile or liquidity unexpectedly deteriorates, capital position weakens on higher-than-currently-expected credit costs or the newly developed growth strategy appears to be substantially riskier than previously, which will likely result in more volatile business position.

“It’s very important that Standard & Poor’s has given us time to finalise all the corporate procedures and elaborate detailed strategy. The opportunities offered with the arrival of the new shareholders and support of a larger player are apparent. The synergy from cooperation across a number of activities would allow to optimise costs and enhance efficiency. That would also help to boost the bank’s key strengths and expand business in the most promising segments. We expect that in the coming months the first fruits of our work will prove soundness of the chosen path,” noted Andrey Shalimov, Deputy Chairman of the Management Board at Vozrozhdenie Bank.

Vozrozhdenie Bank will publish its 9M 2015 IFRS results and hold a conference call for investors on November 24
Vozrozhdenie Bank Board of Directors has held its meeting