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Moody's assigns Ba3/NP/E+/Aa3.ru ratings to Gazenergoprombank (Russia)

February 28, 2008 | Сbonds

First-time ratings

Moscow, February 28, 2008 -- Moody's Investors Service today assigned the
following global scale ratings to Gazenergoprombank: a bank financial
strength rating ("BFSR") of E+ and long-term and short-term local and
foreign currency deposit ratings of Ba3/Not Prime. Concurrently, Moody's
Interfax Rating Agency assigned a long-term national scale rating of Aa3.ru
to Gazenergoprombank. 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

According to Moody's and Moody's Interfax ("Moody's"), the Ba3/Not Prime/E+
global scale ratings reflect Gazenergoprombank's global default and loss
expectation, while the Aa3.ru national scale rating reflects the standing of
the bank's credit quality relative to that of its domestic peers.

According to Moody's, Gazenergoprombank's ratings reflect its entrenched
positions in the central region of Russia stemming from its strong links
with Gazprom and, in particular, with local gas distribution companies, as
well as its adequate liquidity, good asset quality to date and recent
considerable improvement in profitability and operating efficiency.
However, the ratings are constrained by the bank's significant reliance on a
highly concentrated funding coming from the single group of clients in the
gas and utility sectors, as well as an insufficient capital adequacy level,
which is restricting the growth of the bank, and a certain susceptibility to
political risks. In addition, the bank's still significant business
concentration related to gas sector companies exerts further pressure on its

Moody's notes that Gazenergoprombank would be unlikely to receive support
from the Russian government in case of distress. However,
Gazenergoprombank's Ba3/NP global local currency deposit ratings reflect
Moody's assessment of a moderate probability of support in the event of need
from the bank's ultimate controlling shareholder Gazprom. Although
Gazenergoprombank is legally owned by Mezhregiongaz, an unrated domestic gas
distribution subsidiary of Gazprom, Moody's used the Ba1 Baseline Credit
Assessment of Gazprom as the rating of Gazenergoprombank's supporting
parent. Moody's notes Gazenergoprombank's key role as the settlement bank
for Mezhregiongaz. Consequently, Gazenergoprombank's global local currency
deposit ratings enjoy a two-notch uplift from its Baseline Credit Assessment
of B2.

Moody's notes that an upgrade of Gazenergoprombank's deposit ratings might
be possible in the event of a material strengthening of the bank's
franchise, provided this is accompanied by visible improvements in business
diversification and a decreasing dependence on a limited number of
customers, together with a solid track record of internal capital generation
and the maintenance of an adequate financial performance. At the same time,
any evidence of a material strengthening in parental support from the bank's
ultimate shareholder Gazprom might also lead to an upgrade of the bank's
deposit ratings.

Conversely, any material adverse changes in the bank's risk profile,
particularly growth in market risks or increase in single-name borrower
concentration, or a weakening liquidity position might have a negative
impact on the bank's ratings. Gazenergoprombank's deposit ratings could be
also downgraded if any actions of Gazprom were to prompt Moody's to lower
its current perception of the probability of parental support.

Headquartered in Moscow, Gazenergoprombank had total assets of USD900
million and shareholders' equity of USD43.3 million as at YE2006.
According to unaudited financials prepared in accordance with local
accounting standards, in 2007 the bank more than doubled both its total
assets and shareholders' equity figures compared to the previous year.

Company: Gazenergoprombank

Full company nameGazenergoprombank
Country of riskRussia
Country of registrationRussia


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