S&P cuts ratings of Russia’s Promsvyazbank to B+ from BB-

MOSCOW, Nov 7 (PRIME) -- International rating agency Standard & Poor’s Global Ratings (S&P) has cut long-term issuer default ratings in local and foreign currencies of Russia’s Promsvyazbank to B+ from BB- and put them on revision with a possibility of a further downgrade, the agency said in a statement late on November 3.

Dmitry Ananyev, chairman of Promsvyazbank’s management board, said in a statement that the decision was understandable, but made without taking into account long-term prospects of Promsvyazbank.

“Risks have grown significantly in the private sector of the banking system. We have to make drastic steps to reload and improve stability of the bank. These changes are conditioned not just by our wish to adapt fast to a new situation, but also by our vision of the group’s development for several years to come,” he said.

The quality of the bank’s operating profit is good, as the share of no-risk commission income in the combined operating income of the bank amounts to 37%. Commission incomes cover up to 84% of operating expenses, one of the highest figure on the Russian market, he said.

On October 27, Vozrozhdenie said in a statement that shareholders of Promsvyazbank and Vozrozhdenie decided to delay a merger of the two banks, and will now focus on creation of a digital bank on the basis of Vozrozhdenie.

On November 1, international rating agency Moody’s downgraded Promsvyazbank’s long-term local and foreign-currency senior unsecured debt and deposit ratings to B2 from Ba3, cut the baseline credit assessment (BCA) of Promsvyazbank to caa1 from b2, and downgraded long term local- and foreign-currency issuer ratings of Promsvyaz Capital B.V., core owner of Promsvyazbank, to Caa1 from B3.

The agency said that the decision was driven by Moody’s view that the bank's standalone credit profile had weakened as the bank's shareholders had failed to vote in favor of the merger with Vozrozhdenie Bank.

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