February 21, 2008 |
Moscow, February 20, 2008 -- Moody's Investors Service today assigned the
following global scale ratings to Sobinbank: 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
Sobinbank. 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 Sobinbank'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 Sobinbank 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. Hence, the
B3 long-term foreign currency deposit rating assigned to the bank does not
incorporate any probability of external support.
According to Moody's, Sobinbank's deposit ratings reflect the bank's clear
development strategy, its expanded branch network and diversified product
mix, certain improvements in its corporate governance practices, established
business relationships with a number of large corporate clients, as well as
stable growth of retail business and good asset quality to date. At the same
time, the ratings are constrained by significant single-name and industry
concentration of the bank's assets, insufficient diversification of its
funding base, still considerable level of related-party business, coupled
with low levels of economic capitalisation, as well as modest profitability
and cost efficiency metrics.
Moody's notes that Sobinbank's BFSR and deposit ratings have limited upside
potential in their current state. At the same time, further growth of the
bank's market franchise in corporate and retail market segments accompanied
with a lowering of concentration levels of both assets and liabilities and
reduction in the volume of related-party business could become positive
rating drivers for the bank's deposit ratings in the longer term, as could
material improvement of the bank's financial performance indicators and
consistently strong capital levels.
A downgrade of Sobinbank's current ratings at their current state is also a
remote possibility. However, further increase in concentration of
Sobinbank's assets and/or funding base, growth of related-party exposure, as
well as material deterioration of the bank's asset quality and financial
performance, especially if coupled with the lowering capital levels, may
exert downward pressure on the bank's deposit ratings.
Domiciled in Moscow, Sobinbank was placed within the top 40 Russian banks in
terms of assets as of October 2007. As at YE2006 Sobinbank reported total
IFRS assets of USD2.2 billion (YE2005: USD1.3 billion), total capital of
USD299 million (YE2005: USD304 million). Net IFRS income in
2006 was USD16.6 million (USD42.3 million in 2005).
Sobinbank runs its business through a head office, as well as 22 branches,
42 additional offices and more than 200 sales offices covering major
European and some Asian regions of the Russian Federation.
Sobinbank's banking network also includes its subsidiaries -- Finservice
(bank for consumer lending, joint project with food retailer "7th
Continent", 49% owned by Sobinbank and 51% owned by "7th Continent") and
Russian Mortgage Bank (bank for mortgage lending, fully owned by Sobinbank).
|Full company name||Joint Stock Bank "Sobinbank"|
|Country of risk||Russia|
|Country of registration||Russia|