29 Dec 2012 12:42

S&P rates Baltiyskiy Bank 'B-/C'; Outlook Stable

MOSCOW. Dec 29 (Interfax) - Standard & Poor's Ratings Services said on Friday that it had assigned its 'B-' long-term and 'C' short-term counterparty credit rating to Russia-based Baltiyskiy Bank.

S&P said in a press release: "The outlook is stable. At the same time, we assigned an 'ruBBB-' Russia national scale rating.

The ratings on Baltiyskiy Bank reflect the 'bb' anchor for a bank operating primarily in Russia, its "moderate" business position, "weak" capital and earnings, "weak" risk position, "average" funding, and "adequate" liquidity, as our criteria define these terms. The stand-alone credit profile is 'b-'.

"Under our bank criteria, we use our Banking Industry Country Risk Assessment's economic and industry risk scores to determine a bank's anchor, the starting point in assigning an issuer credit rating. The anchor for a commercial bank operating only in Russia is 'bb', based on an economic risk score of '7' and an industry risk score of '7'.

"The stable outlook on Baltiyskiy Bank reflects the balance between our anticipation of its growth in retail lending and further development of its franchise in the North-West Federal District against its persistently weak capitalization and operating performance.

"The probability of rating actions in 2013 is low, in our opinion. We believe that Baltiyskiy Bank's risk profile is unlikely to improve in the next 12-18 months, given relative concentrations, and exposure to real estate. However, we could raise the ratings if Baltiyskiy Bank's capital adequacy improved significantly, notably because of higher earnings generation or capital injection, which could raise our projected risk-adjusted capital (RAC) ratio (before adjustments for diversification) to more than 5% on a sustainable basis and create a buffer above the minimum regulatory capital adequacy ratio.

"We would consider a negative rating action if the bank's liquidity sharply deteriorated or nonbank assets expanded on the balance sheet. The decline of the projected RAC ratio to less than 3%, which could arise from higher unexpected growth or elevated credit costs, could also lead to a downgrade."