17 Aug 2009 17:46

Moody's confirms D-/Ba3 ratings of Russia's Bank Saint-Petersburg

MOSCOW. Aug 17 (Interfax) - Moody's Investors Service has confirmed the long-term deposit and senior unsecured debt ratings of Bank Saint-Petersburg ("BSPB") at Ba3 and assigned a negative outlook on these ratings, the ratings agency said in a statement.

BSPB's D- bank financial strength rating (BFSR) was confirmed with negative outlook. The bank's Not Prime short-term ratings were affirmed. The bank's B1 subordinated long-term debt rating was also confirmed and carries a negative outlook.

This rating action completes the process of review of BSPB's ratings which commenced on 7 April 2009 when Moody's placed the bank's D- BFSR and Ba3 long-term ratings on review for possible downgrade. (These rating actions represent the last rating actions for BSPB taken by Moody's.)

"Despite the evident deterioration of the bank's assets, BSPB has been in a position to successfully attract capital from external sources and continues to report sound income before provisions that allows its to absorb mounting losses arising from its loan book," says Semyon Isakov, a Moscow-based Moody's Assistant Vice President -Analyst and lead analyst for Bank Saint-Petersburg.

Moody's notes that since late 2008 BSPB has been successful in attracting into its capital subordinated loans exceeding RUB5 billion (US$175 million), and is progressing towards conversion of part of its subordinated debts into Tier 1 capital that should further support the bank's ability to absorb possible losses arising from its deteriorating loan book. "In addition, the bank continues to report healthy performance results before provisions, due to its strong efficiency profile that materially helps it in absorbing of losses arising from impairment of its assets," Isakov said.

Due to a limited reliance on wholesale sources for funding together with a relatively stable -- albeit concentrated -- customer deposit base, the bank's liquidity position marginally improved over the recent period and was additionally supported by the recent cash injections into its capital. However, in Moody's view, the short-term and concentrated deposit base is not immune to the difficult economic environment, and may be vulnerable to external systemic stresses.

At the same time Moody's assigns a negative outlook to BSPB's ratings reflecting the ongoing impairment of its assets possibly resulting into a rating downgrade in the longer term if the impairment of the bank's assets is higher than currently anticipated by Moody's.

Headquartered in St. Petersburg, Russia, BSPB is the largest private bank in St. Petersburg (Russia's second-largest city). As at end-March 2009 the bank reported total IFRS assets of RUB219 billion (US$6.4 billion) and shareholder's equity of RUB19.1 billion (US$561 million). The reported net income for the first quarter of 2009 was RUB240 million (US$7 million).