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Fitch Affirms 9 Ukrainian Banks' National Long-term Ratings
September 4, 2014 / 1:48 PM / 3 years ago

Fitch Affirms 9 Ukrainian Banks' National Long-term Ratings

(The following statement was released by the rating agency) MOSCOW/WARSAW, September 04 (Fitch) Fitch Ratings has affirmed seven foreign-owned Ukrainian banks' National Long-term Ratings and, where assigned, senior unsecured local currency debt ratings at 'AAA(ukr)'. At the same time, the agency has upgraded foreign-owned PJSC Alfa-Bank's (ABU) National Long-term Rating and senior unsecured local currency debt ratings to 'AA+(ukr)' from 'BBB-(ukr)'. Fitch has also affirmed state-owned JSC The State Export-Import Bank of Ukraine's (Ukreximbank) and JSC State Savings Bank of Ukraine's (Oschadbank) National Long-term Ratings at 'AA-(ukr)'. Apart from ABU, the foreign-owned banks are Public Stock Company 'JSC Industrial & Investment Bank (PSC Prominvestbank), Public Joint Stock Company UkrSibbank, Ukrsotsbank (Ukrsots), PJSC VTB Bank (VTBU), ProCredit Bank (Ukraine) (PCBU), PJSCCB Pravex-Bank (Pravex), and PJSC Credit Agricole Bank (CAB). The banks' other ratings are unaffected by today's rating action. A full list of rating actions is provided at the end of this rating action commentary. KEY RATING DRIVERS The rating actions follow Fitch's recent review of these banks' ratings after the downgrade of Ukraine's Long-term local currency IDR to 'CCC' from 'B-' and the affirmation of the sovereign's Long-term foreign currency IDR at 'CCC' (see Fitch Downgrades Ukraine's LC IDR to 'CCC'; Affirms FC IDR at 'CCC', dated 22 August 2014, and Fitch Reviews 11 Ukrainian Banks' IDRs on Sovereign Rating Change, dated 26 August 2014, at www.fitchratings.com). The affirmation of National Ratings reflects Fitch's view that the creditworthiness of these banks relative to each other and to other Ukrainian issuers has not changed significantly as a result of the sovereign rating downgrade. The upgrade of ABU reflects that the bank's LC IDR is now above that of the sovereign. The 'AAA(ukr)' National Ratings and, where assigned, senior unsecured local currency debt ratings, of foreign-owned banks reflect Fitch's view of the availability of support, in case of need, from their financially strong shareholders. The Rating Watch Negative (RWN) on Ukrsots' and Pravex's National Ratings reflects Fitch's view that shareholder support will probably become less reliable if the banks are sold, in particular, to local shareholders. At the same time, we believe that these banks' current shareholders will likely have a high propensity to provide support to their Ukrainian subsidiaries prior to any sale. ABU's 'AA+(ukr)' National Rating and senior debt ratings consider potential support the bank may receive from other assets controlled by its main shareholders, including from its sister bank, Russia-based OJSC Alfa-Bank (AB; BBB-/Negative). However, the probability of such support is limited due to ABU's indirect relationship with the shareholders' other assets and a mixed track record of support from its main shareholders. The 'AA-(ukr)' National Ratings of state-owned Ukreximbank and Oschadbank are underpinned by Fitch's view of the Ukrainian authorities' high propensity to provide support to these banks based on their 100% state ownership, policy roles, high systemic importance, and the track record of capital and liquidity support for the banks under different governments. However, the ability to support is limited, as indicated by the sovereign's 'CCC' Long-term IDRs. RATING SENSITIVITIES The Stable Outlook on the National Ratings reflects Fitch's view that any future deterioration in these banks' credit profiles is likely to be broadly in line with that of other Ukrainian issuers, meaning that the banks' default risk relative to other issuers will remain broadly unchanged. The 'CCC' LC IDR for Ukraine implies that Fitch now considers default a real possibility. This indicates heightened cliff risk for high ratings on the National scale as, by definition, National and International ratings converge at 'D' (default), and that National Ratings may be downgraded sharply below 'AAA'. Fitch expects to resolve the RWN on Ukrsots' and Pravex's National Ratings once the sales, should they take place, are completed. If, in Fitch's view, support from new shareholders cannot be factored into the ratings, then the National Ratings of these two banks are likely to be downgraded. The rating actions are as follows: PJSC Prominvestbank: Senior unsecured local currency debt rating: affirmed at 'AAA(ukr)' National Long-term rating: affirmed at 'AAA(ukr)', Outlook Stable PJSC UkrSibbank: Senior unsecured local currency debt: affirmed at 'AAA(ukr)' National Long-term rating: affirmed at 'AAA(ukr)', Outlook Stable Ukrsotsbank: Senior unsecured local currency debt: 'AAA(ukr)' maintained on RWN National Long-term rating: 'AAA(ukr)', maintained on RWN PJSC VTB Bank: Senior unsecured local currency debt: affirmed at 'AAA(ukr)' National Long-term rating: affirmed at 'AAA(ukr)', Outlook Stable ProCredit Bank (Ukraine): Senior unsecured local currency debt: affirmed at 'AAA(ukr)' National Long-term rating: affirmed at 'AAA(ukr)', Outlook Stable Pravex: National Long-term rating: 'AAA(ukr)', maintained on RWN CAB: National Long-term rating: affirmed at 'AAA(ukr)', Outlook Stable PJSC Alfa-Bank: Senior unsecured local currency debt: upgraded to 'AA+(ukr)' from 'BBB-(ukr)' Upcoming senior unsecured local currency debt: upgraded to 'AA+(EXP)(ukr)' from 'BBB-(EXP)(ukr)' National Long-term rating: upgraded to 'AA+(ukr)' from 'BBB-(ukr)', Outlook Stable Ukreximbank: National Long-term rating: affirmed 'AA-(ukr)', Outlook Stable Oschadbank: National Long-term rating: affirmed 'AA-(ukr)', Outlook Stable Contact: Primary Analysts Olga Ignatieva (Ukreximbank, Oschadbank, Ukrsots, UkrSibbank, CAB, Prominvestbank) Senior Director +7 495 956 6906 Fitch Ratings Moscow Valovaya str., 26 Moscow Anton Lopatin (Pravex, ProCredit Ukraine) Director +7 495 956 7096 Fitch Ratings Moscow Valovaya str., 26 Moscow Alexander Danilov (ABU, VTBU) Senior Director +7 495 956 2408 Fitch Ratings Moscow Valovaya str., 26 Moscow Secondary Analysts Natalia Shakhina (CAB, Ukrsots) Analyst +44 203 530 1577 Anna Erachina (Pravex, ProCredit Ukraine) Analyst +7 495 956 7063 Evgeny Konovalov (ABU, VTBU) Associate Director +7 495 956 9932 Sergey Popov (Prominvestbank, UkrSibbank, Ukreximbank, Oschadbank) Associate Director +7 495 956 9981 Committee Chairperson Artur Szeski Senior Director +48 22 338 6292 Media Relations: Elaine Bailey, London, Tel: +44 203 530 1153, Email: elaine.bailey@fitchratings.com; Julia Belskaya von Tell, Moscow, Tel: +7 495 956 9908, Email: julia.belskayavontell@fitchratings.com. Additional information is available on www.fitchratings.com. Applicable criteria, 'Global Financial Institutions Rating Criteria', dated 31 January 2014, and the 'National Scale Rating Criteria', dated 30 October 2013, are available on www.fitchratings.com. Applicable Criteria and Related Research: Global Financial Institutions Rating Criteria here National Scale Ratings Criteria here Additional Disclosure Solicitation Status here ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

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