OREANDA-NEWS. February 02, 2016. RusRating has lowered the credit rating of Millennium Bank (ZAO) from “BBB” to “CC” on the national scale and from “BB” to “C” on the international scale, in both cases with a negative outlook.

The rating cut is due to the Bank’s violation of capital adequacy requirements following the creation of additional reserves, with increased regulatory risks another contributing factor.

The negative outlook reflects the high probability (in RusRating’s view) that the Bank’s license will be withdrawn.

The rating itself is based on prospects for support from the Bank’s shareholders (subsidiaries of RZD Russian Railways).

Constraining factors include high regulatory risks.

About the Bank

Millennium Bank is a smaller private-sector Moscow bank that specialises in working with subsidiaries and business partners of RZD Russian Railways. The largest blocks of shares are held by RZD subsidiaries plus one of that company’s largest contractors, OAO Bamtonnelstroi, a member of the privately-owned SK Most Group.

Capital adequacy norms have been violated, which (given regulatory requirements) is an obstacle to ongoing operations. External liabilities are more than usually concentrated by both instrument type and individual creditor. Corporate loans are highly concentrated by individual borrower and of low quality. Financial results are negative due to the cost of setting aside additional reserves. Overall risk sensitivity is high. Risks to liquidity are likewise high.