Fitch Maintains Novikombank's 'B-' IDR on RWN; Withdraws Ratings
OREANDA-NEWS. Fitch Ratings has withdrawn Novikombank's (Novikom) ratings, including the 'B-' Long-Term Foreign Currency Issuer Default Rating (IDR), which remained on Rating Watch Negative (RWN) upon withdrawal. At the same time, Novikom's Viability Rating (VR) has also been downgraded to 'f' from 'b-', prior to withdrawal. A full list of rating actions is available at the end of this rating action commentary.
Fitch has chosen to withdraw the ratings of Novikom for commercial reasons.
KEY RATING DRIVERS
The downgrade of the VR to 'f' reflects Fitch's view that the bank has failed following a material capital shortfall. Novikom's Fitch core capital was negative at end-1Q16, driven by significant impairment charges on problem loans and negative equity at subsidiary Fundservicebank.
The Long-Term IDRs remain at the 'B-' level as Novikom has not announced any plans to impose losses on senior, third-party creditors (which constitute reference obligations for the bank's IDRs). The bank plans to convert subordinated debt (mostly held by a subsidiary of major shareholder Russian Technologies State Corporation (Rostec)) into equity and also receive new equity from its owner to support solvency.
The RWN on the IDRs reflects uncertainty about the extent of Novikom's asset quality problems and whether planned recapitalisation measures by Rostec will be sufficient to support the 'B-' rating.
At the same time, Fitch acknowledges Rostec's publicly stated intention to recapitalise Novikom in the required amount.
RATING SENSITIVITIES
Not applicable
The ratings were withdrawn after the following actions:
Long-Term Foreign and Local Currency IDRs: 'B-', maintained on RWN
Short-Term Foreign-Currency IDR: 'B', maintained on RWN
Viability Rating downgraded to 'f' from 'b-', removed from RWN
Support Rating affirmed at '5'
Support Rating Floor affirmed at 'No Floor'
National Long-term Rating: 'BB-(rus)', maintained on RWN
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