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Moody's changes Vostochny Express Bank rating outlook on positive

January 15, 2008 | Сbonds

Outlook change affects deposit ratings; BFSR outlook remains stable

Moscow, January 15, 2008 -- Moody's Investors Service today changed the
outlook on the B3/Not Prime local and foreign currency deposit ratings of
Vostochny Express Bank ("VE") to positive from stable. VE's bank financial
strength rating ("BFSR") of E+ was affirmed with stable outlook.
Concurrently, Moody's Interfax Rating Agency affirmed VE's long-term
national scale rating ("NSR") of Baa2.ru. The NSR carries no specific
outlook. Moscow-based Moody's Interfax is majority-owned by Moody's, a
leading global rating agency.

According to Moody's, the change in the rating outlook reflects VE's
established and continuously strengthening franchise in its home region of
Far East and Eastern Siberia, where the bank currently operates the
second-largest retail distribution network and also has the second-largest
retail loan portfolio. The positive outlook also reflects VE's solid
financial fundamentals.

However, Moody's cautions that the uncertainty on the international credit
markets is reducing the bank's access to wholesale funding, which could
adversely affect VE's loan expansion and liquidity profile and consequently
erode the bank's franchise value.

Moody's acknowledges the importance of VE's efforts to diversify funding
sources, with a growing focus on domestic retail deposits. The rating agency
notes that the bank's ability to establish good access to stable funding is
critical for its future development.

Headquartered in Khabarovsk, Russia, Vostochny Express Bank reported total
assets of RUB15.71 billion (US$608.5 million) and shareholders'
equity of RUB1.8 billion (US$70 million) under IFRS (unaudited) as at 30
June 2007. Its controlling shareholder Mr. Igor Kim also controls URSA Bank
(rated Ba3/NP/D-), which assisted VE in its lending expansion during
2006 and the first half of 2007 through acquiring VE's retail loans.
According to Interfax, at 30 September 2007 Vostochny Express Bank ranked as
the 91st largest bank in Russia in terms of total assets as calculated under
local regulatory rules.

Company: Orient Express Bank

Full company namePJSC CB «Vostochny»
Country of riskRussia
Country of registrationRussia


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