Fitch downgrades Russia banks

Fitch Ratings said it downgraded the long-term issuer default ratings of Alfa-Bank and MDM Bank to BB- from BB. The agency said it also changed the outlooks to negative from stable on the long-term issuer default ratings of MDM Bank, Alfa-Bank, Nomos-Bank (rated B+), Promsvyazbank (rated B+), Uralsib Bank (rated B+), Uralsib Leasing Group (rated B+) and Bank Zenit (rated B+). Fitch also said it affirmed Russian Standard Bank's long-term issuer default rating at BB- with a negative outlook, while URSA Bank's long-term issuer default rating of B+ remains on Rating Watch positive.

The downgrades reflect ongoing and likely future asset quality deterioration driven by the difficult Russian operating environment, the banks' moderate current loss absorption capacity and uncertainty as to contingency recapitalization plans, Fitch said.

The downgrades of MDM and Alfa reflect the already significant loan impairment at those institutions, risks relating to substantial foreign-currency lending and the general deterioration in the operating environment, the agency said.

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