Moscow, June 07, 2012 -- Moody's Interfax Rating Agency has today confirmed the Aaa.ru National Scale Rating (NSR) of ZAO Raiffeisenbank.
Moody's Interfax decision to confirm ZAO Raiffeisenbank's NSR reflects the bank's strong performance, as well as its relative resilience from potential pressures stemming from the parent, Raiffeisen Bank International AG (RBI), which was recently downgraded. For further details on the RBI downgrade, please see http://www.moodys.com/research/Moodys-downgrades-Austrian-banks-ratings-carry-stable-or-negative-outlooks--PR_247329 published on 6 June, 2012.
Today's rating action on ZAO Raiffeisenbank concludes the review initiated on 21 February, 2012, when the bank's ratings were placed on review for downgrade, following a similar rating action on RBI.
For additional information on bank ratings, please refer to the webpage containing Moody's related announcements http://www.moodys.com/bankratings2012.
Please see ratings tab on the issuer/entity page on moodys.com for information on the Global Scale Ratings of this issuer.
The confirmation of the bank's NSR reflects the strengthening of the bank's standalone credit assessment on the global scale to baa3 from ba1 that effectively neutralised the reduction in rating uplift from parental support following the downgrade of RBI.
Moody's recognises the bank's decreased reliance on wholesale funding sources; the bank's local customer deposit base accounted for 79.4% of its total liabilities as at end-March 2012 compared with 67.9% at year-end 2010. ZAO Raiffeisenbank also has been able to sustain one of the lowest funding costs among its Russian peers.
Moody's also acknowledges the bank's low-risk appetite, reflected by its robust asset quality and much lower level of problem loans compared to its major peers. The bank's financial fundamentals are strong, in particular (i) the robust loss-absorbing buffer (as at end-March 2012 equity-to-assets ratio and return on average total assets totalled 16.6% and 2.9% respectively); (ii) the robust liquidity cushion (with loan--to-deposit ratio of 87%); and (iii) highly liquid assets (cash and cash equivalents), accounting for 31% of the bank's total liabilities as at end-March 2012.
In Moody's view, these factors -- combined with ZAO Raiffeisenbank's entrenched franchise and highly conservative risk appetite -- places the bank in a stronger position relative to its peers to manage the potential risks of deterioration in the operating environment.
Finally, Moody's believes that the credit profile of ZAO Raiffeisenbank is relatively well insulated from the pressures experienced by its parent, which is now rated one notch lower on a standalone basis, ba1 compared to baa3 for ZAO Raiffeisenbank.
WHAT COULD CHANGE THE RATINGS UP/DOWN
Moody's believes there is little likelihood of any upward pressure on ZAO Raiffeisenbank's ratings in the near-term, unless there is a material improvement in the operating environment and a consequent easing of pressures on the parent bank.
Any substantial deterioration in the operating environment resulting in significant erosion of the bank's historically robust financial fundamentals could warrant a downgrade of ZAO Raiffeisenbank's ratings. In addition, further significant downward pressure on RBI's standalone rating could affect the Russian subsidiary's debt and deposit ratings.
The methodologies used in these ratings was Bank Financial Strength Ratings: Global Methodology published in February 2007 and Incorporation of Joint-Default Analysis into Moody's Bank Ratings: Global Methodology published in March 2012. Please see the Credit Policy page on www.moodys.com for a copy of these methodologies.
NATIONAL SCALE RATINGS
The ratings are Moody's Interfax Rating Agency's National Scale Ratings (NSRs) which are intended as relative measures of creditworthiness among debt issues and issuers within a country, enabling market participants to better differentiate relative risks. NSRs differ from Moody's global scale ratings in that they are not globally comparable with the full universe of Moody's rated entities, but only with NSRs for other rated debt issues and issuers within the same country. NSRs are designated by a ".nn" country modifier signifying the relevant country, as in ".ru" for Russia. For further information on Moody's approach to national scale ratings, please refer to Moody's Rating Implementation Guidance published in March 2011 entitled "Mapping Moody's National Scale Ratings to Global Scale Ratings".
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Moody's Interfax Rating Agency (MIRA) specializes in credit risk analysis in Russia. MIRA is a joint-venture between Moody's Investors Service, a leading provider of credit ratings, research and analysis covering debt instruments and securities in the global capital markets, and the Interfax Information Services Group. Moody's Investors Service is a subsidiary of Moody's Corporation (NYSE: MCO).
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Semyon IsakovAsst Vice President - Analyst Financial Institutions Group Moody'sInvestors Service Limited, Russian Branch 7th floor, Four Winds Plaza21 1st Tverskaya-Yamskaya St.Moscow 125047 Russia Yves J Lemay MD - Banking Financial Institutions Group JOURNALISTS: 44 20 7772 5456 SUBSCRIBERS: 44 20 7772 5454 Releasing Office: Moody's Interfax Rating Agency 7th floor, Four Winds Plaza21 1st Tverskaya-Yamskaya St.Moscow 125047 Russia Telephone: +7 495 228 6060 Facsimile: +7 495 228 6091(C) 2012 Moody's Investors Service, Inc. and/or its licensors and affiliates (collectively, "MOODY'S"). All rights reserved.
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