Moody's downgrades Russian banks

Moody's Investors Service said it downgraded seven Russian financial institutions following the weakening of Russia's credit profile, as reflected by Moody's downgrade of Russia's government debt rating to Ba1 from Baa3 on Feb. 20.

Specifically, the agency downgraded

• Sberbank’s national scale rating to Aa1.ru from Aaa.ru, long-term local-currency and foreign-currency senior ratings and foreign-currency backed senior ratings to Ba1 from Baa3 and long-term foreign-currency backed subordinated debt rating to Ba2 from Ba1;

• Bank VTB, JSC’s long-term local-currency and foreign-currency senior ratings to Ba1 from Baa3, long-term local-currency senior credit facility rating to Ba1 from Baa3, long-term foreign-currency subordinated rating to Ba3 from Ba2 and long-term foreign-currency backed senior debt rating to Ba1 from Baa3;

•Alfa-Bank’s long-term local-currency and foreign-currency senior ratings to Ba2 from Ba1, long-term foreign-currency subordinated debt and backed subordinated debt ratings to B1 from Ba3 and long-term foreign-currency backed senior rating to Ba2 from Ba1;

• Gazprombank’s national scale rating to Aa2.ru from Aa1.ru, long-term local-currency and foreign-currency senior ratings to Ba2 from Ba1, long-term foreign-currency subordinated debt rating to B2 from B1 and long-term foreign-currency backed senior rating to Ba2 from Ba1;

• Russian Agricultural Bank’s national scale rating to Aa2.ru from Aa1.ru, long-term local-currency and foreign-currency senior ratings to Ba2 from Ba1 and long-term foreign-currency subordinated debt rating to B2 from B1;

• Vnesheconombank’s long-term local-currency and foreign-currency issuer ratings to Ba1 from Baa3 and short-term local-currency and foreign-currency issuer ratings to NP from P-3; and

• Agency for Housing Mortgage Lending OJSC’s national scale rating to Aa1.ru from Aaa.ru, long-term local-currency and foreign-currency issuer ratings to Ba1 from Baa3, short-term local-currency and foreign-currency issuer ratings to NP from P-3 and long-term local-currency senior and backed senior ratings to Ba1 from Baa3.

The outlooks were revised to negative. This concludes the review for downgrade that began in December.

The weakening of Russia's credit profile has prompted the rating actions on the Russian financial institutions' supported ratings, which benefit from various levels of uplift due to systemic support assumptions. The agency believes that the Russian government will remain willing to assist these banks in the event of need but has less capacity to do so.

The negative outlook reflects the fact that any further downgrade of the sovereign rating could affect Moody's assessment of ratings uplift resulting from systemic support assumptions, the agency said.

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