Fitch Downgrades 13 Russian Foreign-Owned Banks; Outlook Negative
OREANDA-NEWS. Fitch Ratings has downgraded the Long-term Issuer Default Ratings (IDRs) of 13 Russian foreign-owned banks to 'BBB' from 'BBB+'. A full list of rating actions is available at the end of this commentary.
KEY RATING DRIVERS - IDRS, SUPPORT RATINGS, DEBT RATINGS
The downgrade of the banks' IDRs and debt ratings follows the downgrade of Russia's Country Ceiling to 'BBB' from 'BBB+' This in turn reflects Fitch's view that sanctions from and deteriorating relations with the EU and US pose risks to Russia's financial integration with the rest of the world, increasing transfer and convertibility risk. The foreign-owned banks' IDRs and debt ratings are now in line with those of the Russian sovereign, instead of being a notch higher, as previously.
The banks' IDRs, Support Ratings and senior debt ratings continue to reflect Fitch's view that their parents will likely have a strong propensity to support the subsidiaries in case of need, given their majority ownership, the high level of operational and management integration between the banks and their parents, common branding, the importance of Russian business for some groups (in the case of Raiffeisen, Citibank, and Rosbank) and the limited size of others, making them easy to support.
RATING SENSITIVITIES- IDRS, SUPPORT RATINGS, DEBT RATINGS
The Negative Outlook on the banks' ratings reflects that on the sovereign, and the banks could be downgraded if Russia's sovereign ratings and Country Ceiling are downgraded. A significant weakening of the ability and/or propensity of parent banks to provide support (not expected by Fitch at present) could also result in downgrades of the subsidiaries' ratings.
A revision of the sovereign Outlook to Stable would lead to Outlooks on the banks being revised to Stable.
KEY RATING DRIVERS AND SENSITIVITIES - NATIONAL RATINGS
The affirmation of the banks' National Ratings at 'AAA' reflects Fitch's view that the banks remain among the strongest credits in Russia. The Stable Outlooks on the National Ratings reflects Fitch's view that the creditworthiness of Russian issuers relative to each other would be unlikely to change significantly in case of a sovereign downgrade. The banks' National Ratings could be downgraded in case of a significant weakening of the ability and/or propensity of parent banks to provide support.
The rating actions are as follows:
ZAO Raiffeisenbank
Long-term foreign currency IDR: downgraded to 'BBB' from 'BBB+'; Outlook Negative
Long-term local currency IDR: downgraded to 'BBB' from 'BBB+'; Outlook Negative
Short-term foreign currency IDR: downgraded to 'F3' from 'F2'
National Long-term rating: affirmed at 'AAA(rus)'; Outlook Stable
Viability Rating: 'bbb-', unaffected
Support Rating: affirmed at '2'
Senior unsecured debt: downgraded to 'BBB(EXP)' from 'BBB+(EXP)'/affirmed at 'AAA(EXP)(rus)'
Senior unsecured debt: downgraded to 'BBB' from 'BBB+'/affirmed at 'AAA(rus)'
ZAO Citibank
Long-term foreign currency IDR: downgraded to 'BBB' from 'BBB+'; Outlook Negative
Short-term foreign currency IDR: downgraded to 'F3' from 'F2'
National Long-term rating: affirmed at 'AAA(rus)'; Outlook Stable
Viability Rating: 'bbb-', unaffected
Support Rating: affirmed at '2'
Rosbank
Long-term foreign currency IDR: downgraded to 'BBB' from 'BBB+'; Outlook Negative
Long-term local currency IDR: downgraded to 'BBB' from 'BBB+'; Outlook Negative
Short-term foreign currency IDR: downgraded to 'F3' from 'F2'
National Long-term rating: affirmed at 'AAA(rus)'; Outlook Stable
Viability Rating: 'bb+', unaffected
Support Rating: affirmed at '2'
Senior unsecured market linked securities: downgraded to 'BBB(emr)' from 'BBB+(emr)'
Senior unsecured debt: downgraded to 'BBB'/'F3' from 'BBB+'/'F2'; affirmed at 'AAA(rus)'
Rusfinance Bank
Long-term foreign currency IDR: downgraded to 'BBB' from 'BBB+'; Outlook Negative
Long-term local currency IDR: downgraded to 'BBB' from 'BBB+'; Outlook Negative
Short-term foreign currency IDR: downgraded to 'F3' from 'F2'
National Long-term rating: affirmed at 'AAA(rus)'; Outlook Stable
Viability Rating: 'bb+', unaffected
Support Rating: affirmed at '2'
Senior unsecured debt: downgraded to 'BBB' from 'BBB+''; affirmed at 'AAA(rus)'
DeltaCredit Bank
Long-term foreign currency IDR: downgraded to 'BBB' from 'BBB+'; Outlook Negative
Long-term local currency IDR: downgraded to 'BBB' from 'BBB+'; Outlook Negative
Short-term foreign currency IDR: downgraded to 'F3' from 'F2'
National Long-term rating: affirmed at 'AAA(rus)'; Outlook Stable
Viability Rating: 'bb+', unaffected
Support Rating: affirmed at '2'
Senior unsecured debt: downgraded to 'BBB' from 'BBB+'; affirmed at 'AAA(rus)'
Senior unsecured debt of DCB Finance Limited: downgraded to 'BBB(EXP)' from 'BBB+(EXP)'
Bank of China (ELUOSI)
Long-term foreign currency IDR: downgraded to 'BBB' from 'BBB+'; Outlook Negative
Short-term foreign currency IDR downgraded to 'F3' from 'F2'
Long-term local currency IDR: downgraded to 'BBB' from 'BBB+'; Outlook Negative
National Long-term Rating affirmed at 'AAA(rus)'; Outlook Stable
Support Rating affirmed at '2'
OJSC Nordea Bank
Long-term foreign currency IDR: downgraded to 'BBB' from 'BBB+'; Outlook Negative
Short-term foreign currency IDR: downgraded to 'F3' from 'F2'
National Long-term rating: affirmed at 'AAA(rus)'; Outlook Stable
Support Rating: affirmed at '2'
Danske Bank (Russia)
Long-term foreign currency IDR: downgraded to 'BBB' from 'BBB+'; Outlook Negative
Short-term foreign currency IDR: downgraded to 'F3' from 'F2'
National Long-term rating: affirmed at 'AAA(rus)'; Outlook Stable
Support Rating: affirmed at '2'
ING Bank (Eurasia) ZAO
Long-term foreign currency IDR: downgraded to 'BBB' from 'BBB+'; Outlook Negative
Long-term local currency IDR: downgraded to 'BBB' from 'BBB+'; Outlook Negative
Short-term foreign currency IDR: downgraded to 'F3' from 'F2'
National Long-term rating: affirmed at 'AAA(rus)'; Outlook Stable
Support Rating: affirmed at '2'
Senior unsecured debt: downgraded to 'BBB' from 'BBB+'; affirmed at 'AAA(rus)'
SEB Bank JSC
Long-term foreign currency IDR: downgraded to 'BBB' from 'BBB+'; Outlook Negative
Short-term foreign currency IDR: downgraded to 'F3' from 'F2'
National Long-term rating: affirmed at 'AAA(rus)'; Outlook Stable
Support Rating: affirmed at '2'
HSBC Bank (RR) LLC
Long-term foreign currency IDR: downgraded to 'BBB' from 'BBB+'; Outlook Negative
Long-term local currency IDR: downgraded to 'BBB' from 'BBB+'; Outlook Negative
Short-term foreign currency IDR: downgraded to 'F3' from 'F2'
National Long-term rating: affirmed at 'AAA(rus)'; Outlook Stable
Support Rating: affirmed at '2'
Credit Agricole CIB ZAO
Long-term foreign currency IDR: downgraded to 'BBB' from 'BBB+'; Outlook Negative
Long-term local currency IDR: downgraded to 'BBB' from 'BBB+'; Outlook Negative
Short-term foreign and local currency IDRs: downgraded to 'F3' from 'F2'
National Long-term rating: affirmed at 'AAA(rus)'; Outlook Stable
Support Rating: affirmed at '2'
China Construction Bank (Russia) Limited
Long-term foreign currency IDR: downgraded to 'BBB' from 'BBB+'; Outlook Negative
Long-term local currency IDR: downgraded to 'BBB' from 'BBB+'; Outlook Negative
Short-term foreign currency IDR downgraded to 'F3' from 'F2'
National Long-term Rating affirmed at 'AAA(rus)'; Outlook Stable
Support Rating affirmed at '2'.
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