10 Nov 2009 19:03

Russian Rosbank 'BB+/B' Ratings And 'ruAA+' National Scale Ratings Affirmed; Removed From Watch Neg; Outlook Negative

MOSCOW. Nov 10 (Interfax) - Standard & Poor's Ratings Services said today that it affirmed its 'BB+/B' counterparty credit and 'ruAA+' Russia national scale ratings on Russia-based Rosbank OJSC JSCB.

At the same time, it removed all ratings from CreditWatch, where they had been placed with negative implications on June 17, 2009. The outlook is negative.

The ratings on Rosbank reflect S&P's opinion of the significant systemwide risks in the Russian Federation (foreign currency BBB/Negative/A-3, local currency BBB+/Negative/A-2, national scale rating; ruAAA) and in the Russian banking sector.

"We expect the Russian economy will contract 6% in 2009, which has accentuated Rosbank's credit losses, funding and liquidity vulnerabilities, and marginal capitalization," Standard & Poor credit analyst Sergey Dementiev is quoted in the press release as saying.

However, S&P believes that Rosbank's strategically important status within France-based Societe Generale (SocGen) group (SocGen is rated A+/Stable/A-1), its platform and visibility in Russia, and financial and risk governance support partially mitigate these negative factors, the press release says.

"The negative outlook reflects our expectation that Rosbank's asset quality will continue to deteriorate in 2009-2010, putting pressure on financial performance and capital," Dementiev said.

A positive rating action, including revising the outlook to stable, would

be dependent on a sustained return to profit, and an increase in adjusted total equity to double digits, providing it fully supports the bank's loss absorption capacity.

S&P would lower the ratings on Rosbank if the bank's stand-alone credit profile were to materially deteriorate, particularly if problem loans were to increase beyond our base case forecasts, the press release says. It would also lower the ratings if capitalization weakens further from credit losses and is not offset by capital injections from the shareholders; and/or if ties to SocGen and its support for Rosbank were to weaken significantly, it says