OREANDA-NEWS. Fitch Ratings has placed Bank Zenit's (BZ) 'BB-' Long-Term Issuer Default Ratings on Rating Watch Positive (RWP). The agency has also affirmed BZ's Viability Rating (VR) at 'bb-'. A full list of rating actions is available at the end of this commentary.

The RWP on BZ's IDRs, National Rating and Support Rating follows the increase of the ownership stake in the bank by oil company PJSC Tatneft (Tatneft, BBB-/Negative) to 49% from below 25% and the bank's management's expectation that the stake will increase to above 50% by November as a result of the buy-out of some minority shareholders. In the agency's view, should Tatneft become a majority shareholder, consolidating BZ in its financial accounts, the propensity to support the bank will increase. To date, Fitch has not factored support from Tatneft directly into the ratings, although the bank's credit profile has benefitted from significant liquidity placements and capital injections from the company.

An upgrade of BZ's IDRs will likely be limited to one notch to 'BB', two notches below Tatneft's ratings. This is mainly due to Fitch's view that BZ is a non-core asset for Tatneft despite it performing a treasury function for the company.

Tatneft's ability to support BZ is reflected in the company's 'BBB-' IDR, and is capped by the Russian sovereign rating. The company's credit profile is underpinned by low leverage with funds from operations (FFO) adjusted gross leverage of 0.1x at end-2015. The acquisition of BZ will not have an impact on Tatneft's ratings and potential support of the bank should be manageable for Tatneft as BZ's equity accounted for only 15% of FFO at end-2015.

BZ's Support Rating Floor (SRF) of 'No Floor' reflects the bank's limited market shares, as a result of which support from the Russian authorities cannot be relied on, in Fitch's view.