OREANDA-NEWS. RusRating has lowered the credit rating assigned to AO Smartbank from "B" to “CC” on the national scale and from "CCC+" to “C” on the international scale, in both cases with a negative outlook.

The rating cut reflects the partial realisation of regulatory risks (Smartbank’s exclusion from the interbank electronic payments system). The negative outlook is due to the high probability – in RusRating’s view – that the Bank’s license will be withdrawn.

The rating itself is based on the low estimated share of assets exposed to credit risks and a high percentage of highly-liquid instruments.

Constraining factors include high regulatory risks.

About the Bank

Smartbank is a private-sector Moscow bank set up in 2001 that ranks among Russia’s top 600 by assets. According to the Bank, its principal shareholders are Chairman of the Board Alexander Galkin and Board member Agustin Morales-Escomillia. The Bank has a modest branch network. Its principal stated business is providing loans and other services to corporate clients, mainly larger non-profit self-regulatory organisations, although in mid-2015 it began to draw actively on retail funding, which now accounts for the bulk of liabilities. In September 2014 the Central Bank imposed six-month restrictions on certain types of new retail funding in connection with under-assessed credit risks.

Capital is sufficient and its quality is judged healthy. Retail deposits make up the bulk of liabilities. Asset quality is rated satisfactory, based on assessments of client loans and the securities portfolio, as well as the high percentage of highly-liquid instruments, which allow the Bank to readily meet most obligations to retail depositors. Profitability is low due to pressure from operational and administrative costs. Overall risk sensitivity is high. Risks to liquidity are also high.