Moody's cuts some Russian banks

Moody's Investors Service said it took rating action on several Russian banks in response to its concerns that the Russian government's capacity and willingness to provide systemic support to large banks in times of systemic stress could potentially be lower than the agency previously anticipated.

The rating actions include the following:

• Sberbank's A3 long-term foreign- and local-currency senior debt ratings and Baa1 long-term subordinated debt rating were placed on review for downgrade;

• Bank VTB, JSC's Baa1 long-term foreign- and local-currency senior debt ratings and Baa2 long-term subordinated debt ratings were placed on review for downgrade;

• Russian Agricultural Bank's Baa1 long-term foreign- and local-currency senior debt ratings and Baa2 long-term subordinated debt ratings were placed on review for downgrade;

• JSCB Bank of Moscow's Ba3 long-term foreign-currency subordinated debt rating was placed on review for downgrade, and its Ba2 long-term foreign- and local-currency senior debt ratings were affirmed with a stable outlook;

• TransCreditBank's Baa3 long-term local-currency senior debt ratings were affirmed with a stable outlook;

• Vnesheconombank's Baa1 issuer rating and P-2 short-term issuer rating were affirmed with a stable outlook;

• Agency for Housing Mortgage Lending OJSC's Baa1 issuer rating, Baa1 long-term local-currency senior secured and senior unsecured debt ratings and P-2 short-term issuer rating were affirmed with a stable outlook;

• SME Bank's Baa2 long-term local-currency senior debt ratings were affirmed with a stable outlook;

• Alfa-Bank's Ba2 long-term subordinated debt ratings were placed on review for downgrade, and its Ba1 long-term foreign- and local-currency senior debt ratings were affirmed with a stable outlook; and

• Gazprombank's Ba1 long-term subordinated debt ratings were placed on review for downgrade, and its Baa3 long-term foreign- and local-currency senior debt ratings were affirmed with a stable outlook.

Moody's said it sees two trends that could lead to somewhat lower systemic support assumptions: First, given the Russian federal budget's reliance on high oil prices, the agency considers the capacity of Russian authorities to provide systemic support to be increasingly susceptible to the risk of a decline in oil prices. Second, the agency believes the implementation of the government's bank privatization plan may lead to a somewhat higher likelihood of the inclusion of market solutions regarding the provision of support for large troubled banks in the event of need.

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