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Moody's assigns B3/NP/E+/Baa2.ru ratings to Russlavbank (Russia)

February 04, 2008 | Cbonds

First-time ratings

Moscow, February 04, 2008 -- Moody's Investors Service today assigned the
following global scale ratings to Russlavbank ("RSB"): a bank financial
strength rating ("BFSR") of E+ and long-term and short-term local and
foreign currency deposit ratings of B3/Not Prime. Concurrently, Moody's
Interfax Rating Agency assigned a long-term national scale rating of Baa2.ru
to RSB. Moscow-based Moody's Interfax is majority-owned by Moody's, a
leading global rating agency. The outlook on the global scale ratings is
stable, while the national scale rating carries no specific outlook.

According to Moody's and Moody's Interfax ("Moody's"), the B3/Not Prime/E+
global scale ratings reflect RSB's global default and loss expectation,
while the Baa2.ru national scale rating reflects the standing of the bank's
credit quality relative to that of its domestic peers.

Moody's notes that RSB is unlikely to receive support from the Russian
government in case of distress. The scope and timeliness of the support from
the bank's shareholders also remains uncertain. Therefore, RSB's deposit
ratings are based solely on its Baseline Credit Assessment of B3/Not Prime.

According to Moody's, RSB's ratings are underpinned by relatively good
geographical diversification of the bank's business throughout the European
part of Russia and its sound profitability indicators. Another positive
rating driver is the bank's ownership and operation of the CONTACT payment
system, one of the leading and widely spread remittance systems for
individuals on the Russian and CIS market. At the same time, the ratings are
constrained by RSB's limited market franchise, as relates to conventional
banking services for corporate and individual clients, the high level of
single-party concentration in the bank's loan book, low diversification of
the bank's funding base, weakening capitalisation and a material level of
related-party business.

Moody's notes that an upgrade of RSB's deposit ratings might be possible in
the event of a material strengthening of the bank's franchise value and
reduction of single-party concentrations in the bank's credit portfolio and
funding base, if combined with a consistently good track record of
profitability, robust asset quality and sufficient capital adequacy.
Conversely, a material deterioration in asset quality, profitability and/or
liquidity position could potentially weigh negatively on the bank's BFSR and
deposit ratings.

Domiciled in Moscow, RSB conducts its conducts its business through a head
office, as well as 7 branches and 41 outlets spread throughout the European
part of the Russian Federation.

In 2000 RSB launched the CONTACT money transfer system which supports
remittances in Russian roubles, US dollars and euros. As at year-end
2007 the CONTACT system operated a network of 372 Russian banks and 185
foreign banks and post offices, covered 84 countries and executed
annually more than 4.87 million remittance transactions for a total
amount exceeding USD 2.25 billion.

Company: Russlavbank

Full company name
Country of riskRussia
Country of registrationRussia
IndustryBanks

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