OREANDA-NEWS. RusRating has lowered the credit rating of ZAO Russian Standard (Moscow) from “AA-“ to “A-“ on the national scale and from "BBB-" to “BB+“ on the international scale, in both cases with a stable outlook.

According to the agency, the rating cut reflects reduced scope for maintaining stability under stress due to a shrinking loan book, growth in overdue client payments, increased sensitivity to credit risks, and a substantial rise in liquidity risk against the background of heavy dependence on money market resources and a crisis of trust on the interbank market.

The rating itself is based on established market positions; possible access to federal government backing in the form of credit resources; satisfactory earnings; long-term partnerships with international financial institutions; and the Bank’s social significance.

Constraining factors include narrow lines of business; high credit risks; and a limited range of re-financing options.

About the Bank

Russian Standard is a private-sector bank that ranks among the top thirty in Russia by assets. The principal asset of the Russian Standard group, it is controlled by businessman Rustam Tariko. Its business centres on retail loans and has gone through several stages. Up until 2007 the Bank saw rapid growth that made Russian Standard a market leader in this area. The 2008 crisis triggered a substantial contraction in business, but growth resumed in 2010. Since that time retail deposits have become the largest single source of funds, while operations with securities emerged as an alternative revenue source. Credit activity is now once again declining in response to negative macro-economic trends.

Capital is sufficient. External funding draws above all on retail deposits, although recent periods have seen noticeable growth in repo contracts with the Central Bank. Asset quality is less than satisfactory. Risk exposure is high but the associated risk sensitivity is judged moderate thanks to adequate coverage of current risks. Earnings performance is satisfactory but under noticeable pressure from credit risks. Overall risk sensitivity is elevated. Risks to liquidity appear high given current negative macro-economic trends and increased re-financing risks on the interbank market.