S&P lowers Krayinvestbank

Standard & Poor’s said it lowered the long-term counterparty credit rating on Krayinvestbank to B from B+ and affirmed its B short-term counterparty credit rating.

The agency also said it lowered the bank’s Russian national scale rating to ruA- from ruA.

The outlook is stable.

The downgrade reflects a view that a significant weakening of Krasnodar Krai’s budgetary performance and liquidity position has undermined its creditworthiness and hence its ability to support regional government-related entities such as Krayinvestbank, S&P said.

Krasnodar Krai owns 98.04% of Krayinvestbank, the agency said, and a one-notch uplift was previously considered for extraordinary support from the region into the long-term rating on the bank. S&P said it removed this notch of uplift because the region’s capacity to provide such support has reduced.

This is shown by the government’s postponement of a capital injection to 2014 from 2013 and the decrease of that injection to RUB 500 million from RUB 2 billion, the agency said.

Limited capital support from the region and Krayinvestbank’s weak earnings capacity constrain the bank’s ability to strengthen its business position, the agency added.

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