14 Dec 2010 18:24

Fitch upgrades Moskommertsbank to 'B-', outlook Stable

LONDON/MOSCOW. Dec 14 (Interfax) - Fitch Ratings has upgraded Moskommertsbank's (MKB) Long-term Issuer Default Rating (IDR) to 'B-' from 'CCC' and Short-term foreign currency IDR to 'B' from 'C'. The agency also affirmed MKB's Individual and Support ratings at 'E' and '5', respectively. MKB is the Russian subsidiary of Kazakhstan-based Kazkommertsbank (KKB, rated 'B-'/Stable).

MKB, which is 100% owned by KKB, is a relatively small Russia-based bank ranked outside the top 100 by the size of assets and capital. Previously, MKB focused on residential mortgage lending and securitization. In 2009, its strategy shifted towards SME lending, car and consumer loans.

MKB's upgrade, and the equalization of the IDRs with those of the parent, reflect the reasonable track record of liquidity support for MKB from KKB during the crisis, MKB's quite small size relative to its parent and KKB's current intention to maintain a presence on the Russian market.

The Individual Rating reflects the challenges of the new business model, weaknesses in risk management, lack of transparency of operations with related parties and high concentration risks, particularly, on the liabilities side of the balance sheet. The low quality of the loan book, of which mortgages account for 63%, affects MKB's credit profile considerably. At end-H110, NPLs broadly stabilized and reached 21% of the total loans with the highest impairment level in the corporate book.

The rating actions are as follows:

Long-Term Foreign Currency IDR upgraded to 'B-' from 'CCC', Outlook Stable

Short-Term Foreign Currency IDR upgraded to 'B' from 'C'

National Long-Term Rating upgraded to 'BB-(rus)' from 'B-(rus)', Outlook Stable

Individual Rating affirmed at 'E'

Support Rating affirmed at '5'