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Fitch Assigns Russian Standard Bank's USD200m Subordinated Bonds Final 'B'/'RR5' Rating
July 17, 2013 / 4:03 PM / 4 years ago

Fitch Assigns Russian Standard Bank's USD200m Subordinated Bonds Final 'B'/'RR5' Rating

(The following statement was released by the rating agency) LONDON/MOSCOW, July 17 (Fitch) Fitch Ratings has assigned Russian Standard Bank's (RSB; B+/Stable/b+) "new style" subordinated debt issue with write-off features a final long-term rating of 'B'/'RR5'. The bonds have a coupon of 11.5% payable semi-annually, mature in January 2024 and are callable in January 2019. KEY RATING DRIVERS RSB's "new style" Tier 2 subordinated debt issue has been rated one notch lower than the bank's Viability Rating (VR). This includes (i) zero notches for additional non-performance risk relative to the VR, as Fitch believes these instruments should only absorb losses once a bank reaches, or is very close to, the point of non-viability; and (ii) one notch for loss severity, (one notch, rather than two, as these issues will not be deeply subordinated, and will actually rank pari passu with "old style" subordinated debt in case of a bankruptcy). The issue will have coupon/principal write-down features, which in accordance with recently adopted Russian legislation, will be triggered if: (i) the bank's core Tier 1 capital adequacy ratio decreases below 2%; or (ii) bankruptcy prevention measures are introduced in respect to the bank by the Deposit Insurance Agency. The latter is possible as soon as a bank breaches any of its mandatory capital ratios or is in breach of certain other liquidity and capital requirements. For more details on Fitch's approach on rating subordinated debt issues of Russian banks see "Implementation of New Capital Rules in Russia: Moderately Positive, Unlikely to Lead to Rating Changes" dated 19 April 2013 at www.fitchratings.com. RATING SENSITIVITIES The issue's rating is linked to the bank's VR and would therefore likely be upgraded or downgraded following similar action on the VR. Downward pressure on RSB's VR, and consequently the issue's ratings, could stem from (i) a further material increase of contingent risks or weakening of capitalisation as a result of the shareholder acquisition of CEDC; (ii) a significant liquidity squeeze; or (iii) significant asset quality deterioration, driven for example by a marked downturn of operating environment. The gradual rebuilding of the bank's capitalisation, along with moderation of group risks could result in an upgrade of RSB's VR and the issue ratings. For more information on RSB's rating sensitivities see "Fitch Upgrades Two and Affirms Three Russian Consumer Finance Banks" dated 21 March 2013 at www.fitchratings.com. Contacts: Primary Analyst Dmitri Vasiliev Associate Director +7 495 956 5576 Fitch Ratings Moscow Valovaya Str, 26 Moscow Secondary Analyst Konstantin Yakimovich Analyst +7 495 956 9978 Committee Chairperson James Watson Managing Director +7 495 956 6657 Media Relations: Julia Belskaya von Tell, Moscow, Tel: +7 495 956 9908, Email: julia.belskayavontell@fitchratings.com; Hannah Huntly, London, Tel: +44 20 3530 1153, Email: hannah.huntly@fitchratings.com. Additional information is available at www.fitchratings.com. Applicable criteria, 'Global Financial Institutions Rating Criteria', dated 15 August 2012, 'Assessing and Rating Bank Subordinated and Hybrid Securities', dated 5 December 2012, are available at www.fitchratings.com. Applicable Criteria and Related Research: Global Financial Institutions Rating Criteria here Assessing and Rating Bank Subordinated and Hybrid Securities 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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