RusRating Re-Affirms Sovcombank and GE Money Bank Ratings
OREANDA-NEWS. On 8 October 2013 OOO IKB Sovcombank announced that it had signed a binding agreement to acquire a 100% stake in ZAO GE Money Bank. The deal will be finalised within the next few months, following approval from the Federal Anti-Monopoly Service and Central Bank of Russia. All GE Money Bank offices will adopt the Sovcombank brand. Sovcombank has no plans to change its market strategy.
The merger will reinforce Sovcombank's market share in retail loans and expand its regional presence, as well as providing it with world-class banking IT. Its service network will expand by an estimated 20% to around 345 locations with a diverse geographic reach.
RusRating re-affirms the credit ratings of both banks: for Sovcombank “BBB-” on the international scale and “AA-” on the national scale and for GE Money Bank “A+” on the international scale and “AAA” on the national scale, in all cases with a stable outlook.
Assuming that the merger is successfully completed, that Sovcombank maintains its current rate of growth and that realised credit risks remain moderate its rating may be revised upward.
GE Money Bank's rating will remain unchanged until the transfer of ownership is formally completed, after which its rating will be identical to that of Sovcombank.
Sovcombank is a larger private-sector bank and the largest credit organisation in Kostroma region. Services for retail and corporate clients (mainly smaller and mid-sized enterprises) are its priority lines of business. The Bank has a reasonably wide service network that includes a presence in central Russia. As of 1 October 2013 it ranked forty-eighth among Russian banks by net assets, twenty-fifth by retail loans and thirty-first by retail deposits.
Capital is sufficient and its quality is rated favourably. External funding is dependent on retail deposits but its overall stability is likewise rated favourably in the light of past trends. Asset quality is judged satisfactory. Earnings performance is healthy and the impact of variable factors is moderate. Overall risk sensitivity is also moderate. Liquidity is sufficient.
GE Money Bank is a mid-sized private-sector bank and the Russian arm of GE Capital, a General Electric subsidiary. A consumer loan specialist, it has a moderately dense and geographically diverse distribution network. The Bank's business is shaped by GE's experience, business ties and quality standards. As of 1 October 2013 it ranked 127th among Russian banks by net assets and forty-first by retail loans.
Capital adequacy is high and capital quality healthy. External funding is solid and its largest component is loans from the parent group. Assets centre on a retail loan book of satisfactory quality. Earnings performance is strong. Overall risk sensitivity is moderate. Liquidity reserves are high and risks to liquidity are minimal.
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