OREANDA-NEWS. Fitch Ratings has placed Europlan CJSC on Rating Watch Negative (RWN). The rating action follows Europlan's recent announcement that its current owners have reached an agreement to sell the company to the shareholders of B&N Bank. A full list of rating actions follows at the end of this release.

KEY RATING DRIVERS
The RWN reflects the potential for changes in Europlan's strategy, risk appetite, balance sheet structure and/or financial metrics following the change in ownership, and possible contingent risks arising from other assets of the new owners, including B&N Bank.

Europlan is one of the leading privately-owned leasing companies in Russia, focusing on auto leasing (passenger cars, trucks and light commercial vehicles) to primarily SME customers.

The company's 'BB' Long-term Issuer Default Ratings (IDR) and senior debt rating reflect its significant franchise, conservative management and risk appetite, and sound financial metrics. Performance remained reasonable in 1Q15 despite lower business volumes, higher funding costs and an uptick in default rates, and Fitch understands 2Q15 results were broadly in line with those of 1Q15. At end-1Q15, return on equity was 9.4% (2014: 20.1%) supressed by credit losses in a subsidiary bank which is currently deleveraging (14% of total assets at end-1Q15), and the debt to equity ratio was a moderate 3.5x.

Credit risks are mitigated by liquid collateral and average 24% down payments. Europlan is predominantly bank funded, but the company manages refinancing risk by closely matching the maturities of assets and liabilities. FX risk is limited, as the vast majority (over 95%) of both assets and liabilities are rouble-denominated.

RATING SENSITIVITIES
The ratings could be downgraded if Fitch concludes that the company's strategy, risk appetite balance sheet structure and/or financial metrics are likely to significantly weaken following the ownership change, or if in Fitch's view the company is likely to be exposed to significant contingent risks from the other assets of the new owners.

In line with other privately-owned Russian leasing companies, the company could also be downgraded if (i) the weaker operating environment translates into significant deterioration of financial metrics; or (ii) prospects for Russia's economy and macroeconomic stability weaken further beyond Fitch's current expectations.

The ratings could be affirmed if Fitch concludes that the change in ownership is broadly neutral for the company's credit profile, the Russian economy performs better than currently anticipated and Europlan's performance remains sound.

The rating actions are as follows:
Long-term foreign and local currency IDRs: 'BB', placed on RWN
Short-term foreign-currency IDR: affirmed at 'B'
National Long-term Rating: 'AA-(rus)', placed on RWN
Senior unsecured debt: 'BB'/'AA-(rus)', placed on RWN