Moody's: Bank VTB outlook stable

Moody's Investors Service said it affirmed Bank VTB's A2 senior unsecured debt rating, A1/P-1 global local-currency deposit ratings and Baa1/P-2 foreign-currency deposit ratings with a stable outlook and changed the outlook on its D- bank financial strength rating to stable from positive.

The previously positive outlook had reflected Moody's view that VTB was strongly positioned within the D- category, indicating a high probability of migration to the next rating category.

However, the agency said it changed the outlook back to stable based on VTB's reduced capacity to attract market funding, the possibility of a deterioration in its loan portfolio as some of VTB's large borrowers could be adversely affected by the credit and liquidity crunch in Russia and pressure on profitability from likely losses in the securities portfolio in the second half of 2008 following the dramatic decline in the Russian stock market.

On the positive side, Moody's said that the strong support for the bank from the Russian government gives VTB a comfortable cushion enabling it not only to meet its obligations but also to retain and possibly increase its already significant market shares in Russia.

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