RusRating Downgraded Credit Rating of MDM Bank from AA to AA-
OREANDA-NEWS. RusRating has downgraded the credit rating of MDM Bank from “AA” to “AA-” on the national scale and from “BBB” to “BBB-” on the international scale, in both cases with a stable outlook.
According to the agency, the rating cut (from “AA” on the national scale and “BBB” on the international scale) reflects a drawn-out period of limited or no growth in an expanding market, the continuing high percentage of problem loans and non-profile assets, and a decline in the quality of corporate governance.
The rating is based on the financial strength of the Bank’s owners (among them international financial organisations), an established market presence, a positive international reputation and healthy growth potential.
Constraining factors include risks arising from dependence on a single majority shareholder, a potential loss of market position, high credit risks and low returns on core operations.
MDM Bank is a large private-sector universal bank formed in August 2009 from the merger of MDM-Bank into URSA Bank. The Bank is controlled by Sergei Popov, the owner of the pre-merger MDM-Bank; several Russian and foreign private and institutional investors hold minority stakes. The Bank operates a wide branch network and is an established player in the national market that benefits from a positive international image, as well as its owners’ financial resources and political ties at the federal level. At the same time relative to competitors MDM’s position has weakened noticeably across all main lines of business due to a slow post-crisis recovery and stagnant business in an actively expanding market.
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