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RPT-Fitch rates OJSC Bank Saint Petersburg's USD100m subordinated notes final 'B+'
October 23, 2013 / 8:40 AM / 4 years ago

RPT-Fitch rates OJSC Bank Saint Petersburg's USD100m subordinated notes final 'B+'

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Oct 23 (Reuters) - (The following statement was released by the rating agency)

Fitch Ratings has assigned Russia-based OJSC Bank Saint Petersburg’s (BSPB; BB-/Stable/bb-) USD100m “new style” subordinated loan participation notes (LPN) issue a final Long-term rating of ‘B+'. The notes bear a coupon of 10.75% payable semi-annually and have a maturity in April 2019.

KEY RATING DRIVERS

Fitch rates BSPB’s “new style” Tier 2 subordinated debt issues one notch below the bank’s ‘bb-’ Viability Rating (VR). The notching comprises (i) zero notches for additional non-performance risk relative to the VR, as Fitch believes these instruments should only absorb losses once the bank reaches, or is very close to, the point of non-viability; (ii) one notch for loss severity (rather than two, as these issues are not deeply subordinated, and rank pari passu with “old style” subordinated debt in case of a bankruptcy).

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

Changes to the issue’s rating will reflect those on the VR.

The VR could be downgraded due to marked deterioration in the operating environment resulting in erosion of asset quality and capitalisation if not compensated by fresh equity injections. A significant increase in risk appetite could also be rating-negative.

Upward pressure may stem from improved profitability, capitalisation and franchise diversification.

For more details on BSPB’s rating sensitivities see “Fitch Rates OJSC Bank Saint Petersburg ‘BB-'; Outlook Stable; New Sub Debt ‘B+(EXP)'” dated 3 October 2013 at www.fitchratings.com

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