RusRating cancels Russian Standard Bank credit rating
OREANDA-NEWS. RusRating has cancelled the credit rating of Russian Standard Bank. The rating was "BB" on the international scale and "BBB+" on the national scale.
The decision to cancel the rating is based on insufficient information to apply the agency’s rating methodology in accordance with article 12, section 5 of Federal Law No. 222 dated 13 July 2015 “On the operations of credit rating agencies in the Russian Federation, amendments to article 761 of the Federal Law “On the Central Bank of the Russian Federation (Bank of Russia)” and the annulment of certain provisions of other legislative acts of the Russian Federation.”
The rating itself was based on established market positions; possible access to federal government backing in the form of credit resources; satisfactory returns on core operations; and the Bank’s socially-significant role.
Constraining factors included narrow lines of business; high credit risks; a limited range of re-financing options; a weakening of asset quality; and loss-making operations.
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 entrepreneur Rustam Tariko. Its business centres on retail loans and has gone through several stages. Up until 2007 the Bank saw rapid growth that made it a market leader in this area. The 2008 crisis triggered a substantial contraction, but growth resumed in 2010. Since that time retail deposits have become the Bank’s primary source of funds and operations with securities emerged as an alternative revenue source. Credit activity is now again declining in response to negative macro-economic trends.
Capital is sufficient. External funding draws above all on retail deposits, although the volume of repo contracts with the Central Bank and Russian banking counterparties has increased noticeably. Asset quality is less than satisfactory. Risk exposure is high and the associated risk sensitivity appears elevated given less than full coverage of current risks by loan provisions. Financial results are negative against a background of substantial pressure from credit risks. Risks to liquidity have fallen thanks to substantial resources accessed from the CBR and renewed growth in retail funding; at this time they are judged moderate. Overall risk sensitivity is elevated.
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