OREANDA-NEWS. The positive outlook reflects systematic development within the framework of the Bank's chosen business model, coupled with ongoing healthy financial results and a favourable assessment of corporate governance.

The rating itself is based on solid market positions at the regional level; positive development trends; a stable ownership structure coupled with the positive impact of the Bank's shareholders; moderate realised credit risks; a strong capital base; and healthy earnings.

Constraining factors include a funding base weakly diversified by type and the limited capacity of the Bank's owners to provide support.

Chelindbank is a medium-sized private-sector regional bank and one of the largest in the Ural federal district. It is controlled by its own top executives, none of whom holds a stake in excess of 15%; minority investors include the investment fund RenFin II Limited and Mackenzie Financial Corporation, a trust fund. Operations centre on the provision of integrated services to industrial firms, small and mid-sized business and retail clients, mainly in the Chelyabinsk region. A group of subsidiary leasing companies is a local market leader. Overall market positions at the regional level are stable, thanks in part to an established service network and recognised brand. A number of targeted SME financing programmes are in effect, backed by the EBRD and Russia's state-owned SME Bank. Chelindbank is authorised to act as guarantor on client customs payments and loans from the Central Bank.

Capital adequacy is high; capital quality is rated satisfactory, an assessment that reflects the noticeable role of property re-evaluations in capital formation. External funding is dependent on retail deposits but risks to stability are offset by stable and growing market positions, as demonstrated by past trends. Asset quality is rated satisfactory, based on the analysis of client loans. Earnings performance is healthy. Risk sensitivity is moderate. Liquidity is sufficient.