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Fitch Revises 23 Russian Financial Institutions' Outlooks to Positive on Sovereign Change
September 28, 2017 / 2:42 PM / 3 months ago

Fitch Revises 23 Russian Financial Institutions' Outlooks to Positive on Sovereign Change

(The following statement was released by the rating agency) MOSCOW, September 28 (Fitch) Fitch Ratings has revised the Outlooks to Positive from Stable on 23 Russian financial institutions, comprising four state-related banks, 10 foreign-owned banks, certain subsidiaries of the state-related and foreign banks and National Clearing Centre (NCC). Their Long-Term Issuer Default Ratings (IDRs) have been affirmed. All other ratings of these entities are unaffected. The rating actions follows the revision of the Outlook on Russia's sovereign IDRs to Positive from Stable (see 'Fitch Revises Russia's Outlook to Positive; Affirms at 'BBB-'', dated 22 September 2017 at www.fitchratings.com). The full list of rating actions is accessible by clicking the link above. KEY RATING DRIVERS The revision of the Outlooks on the Long-Term IDRs of Sberbank of Russia (SBR, BBB-), Vnesheconombank (VEB, BBB-), Russian Agricultural Bank (RusAg, BB+) and Gazprombank (JSC) (GPB, BB+) reflects the increased likelihood of a strengthening of the government's ability to provide support. The revision of the Outlook on NCC's Foreign Currency (FC) IDR reflects the increased likelihood of an upgrade of Russia's Country Ceiling of 'BBB-' following the change in the sovereign Outlook. NCC's FC IDR is driven by the entity's Viability Rating of 'bbb' and capped by Russia's Country Ceiling. The revised Outlooks on the Long-Term IDRs of Bank of China (Russia), China Construction Bank (Russia) Limited, AO Citibank, Credit Agricole CIB AO, Danske Bank (Russia), HSBC Bank (RR) LLC, ING Bank (Eurasia) JSC, JSC Nordea Bank, SEB Bank JSC, DeltaCredit Bank, Rosbank and Rusfinance Bank (all BBB-), reflect the increased likelihood of an upgrade of Russia's Country Ceiling of 'BBB-' following the change in the sovereign Outlook. Russia's Country Ceiling captures transfer and convertibility risks and limits the extent to which support from the foreign shareholders of these banks can be factored into their Long-Term FC IDRs. The banks' Long-Term Local Currency IDRs, where assigned, also take into account Russian country risks. The change in Outlooks on the Long-Term IDRs of Sberbank Leasing (BBB-), Kazakhstan-based Subsidiary Bank Sberbank of Russia JSC (BB+), Sberbank Europe AG (BB+), Sberbank (Switzerland) AG (BBB-), Gazprombank (Switzerland) Ltd (BB+) and JSC VEB-Leasing (BBB-) reflects the possible strengthening of their parents' ability to support them, if needed. The ratings of these entities reflect their relative strategic importance to, and integration with, their parents and the record of support. The affirmation of the Long-Term IDRs of SBR and VEB at the sovereign level of 'BBB-', and those of RusAg and GPB at 'BB+' reflects Fitch's view of a very high propensity of the Russian authorities to support the banks, in case of need, due to: (i) majority state ownership (100% of VEB and RusAg is government-owned; 50%+1 share in SBR is owned by the Central Bank of Russia (CBR)), or a high degree of state control and supervision by quasi-sovereign entities (GPB); (ii) the exceptionally high systemic importance of SBR as expressed by its dominant market shares, VEB's status as a development bank, RusAg's important policy role of supporting the agricultural sector and GPB's high systemic importance for the banking sector; (iii) the track record of capital support to VEB, GPB and RusAg; and (iv) high reputational risks of a potential default for the Russian authorities/state-controlled shareholders. The ratings of GPB and RusAg are one notch lower than those of SBR and VEB as the banks do not have the exceptional systemic importance of the former or the development bank status of the latter. The notching from the sovereign also reflects (i) delays in provision of significant equity support by the state to RusAg, and potential remaining capital needs of the bank; and (ii) that GPB is not directly majority-owned by the state. The foreign-owned banks' IDRs reflect Fitch's view that their parents will continue to have a strong propensity to support these banks given their majority ownership, the high level of operational and management integration between the banks and their parents, common branding in most cases and the limited size of the subsidiaries, making any support manageable. RATING SENSITIVITIES The Long-Term IDRs could be upgraded if Russia's sovereign ratings and Country Ceiling are upgraded. The ratings could be affirmed at their current levels if the Outlook on Russia's ratings is revised to Stable without the ratings being upgraded. Contact: Primary Analysts Dmitri Vasiliev (Sberbank of Russia, Sberbank (Switzerland) AG, Sberbank Europe AG, Gazprombank (JSC)) Director +7 495 956 5576 Fitch Ratings CIS Limited 26 Valovaya Street, Moscow 115054 Roman Kornev (Gazprombank (Switzerland) Ltd, Subsidiary Bank Sberbank of Russia JSC) Director +7 495 956 7016 Fitch Ratings CIS Limited 26 Valovaya Street, Moscow 115054 Anton Lopatin (Vnesheconombank, National Clearing Centre) Director +7 495 956 7096 Fitch Ratings CIS Ltd 26 Valovaya Street Moscow 115054 Olga Ignatieva (Rosbank, Rusfinance Bank, DeltaCredit Bank) Senior Director +7 495 956 69 06 Fitch Ratings CIS Ltd 26 Valovaya Street Moscow 115054 Aslan Tavitov (Sberbank Leasing) Director +44 20 3530 1788 Fitch Ratings Limited 30 North Colonnade London E14 5GN Sergey Popov (Russian Agricultural Bank, Bank of China (Russia), China Construction Bank (Russia) Limited, AO Citibank, Credit Agricole CIB AO) Associate Director +7 495 956 9981 Fitch Ratings CIS Ltd 26 Valovaya Street Moscow 115054 Anna Erachina (JSC Nordea Bank, ING Bank (Eurasia) JSC, Danske Bank (Russia), SEB Bank JSC, HSBC Bank (RR) LLC) Associate Director +7 495 956 7063 Fitch Ratings CIS Ltd 26 Valovaya Street Moscow 115054 Ruslan Bulatov (JSC VEB-Leasing) Associate Director +7 495 956 9982 Fitch Ratings CIS Limited 26 Valovaya Street, Moscow 11505 Secondary Analysts Ruslan Bulatov (Vnesheconombank, Gazprombank (JSC), Sberbank Leasing) Associate Director +7 495 956 9982 Ilya Sarzhin (Bank of China (Russia), China Construction Bank (Russia) Limited, JSC Nordea Bank, ING Bank (Eurasia) JSC) Analyst +7 495 956 9983 Artem Beketov (Credit Agricole CIB AO, Danske Bank (Russia), SEB Bank JSC, JSC VEB-Leasing) Analyst +7 495 956 9932 Alyona Agrenenko (Rusfinance Bank, DeltaCredit Bank, AO Citibank) Associate Director +7 495 956 24 09 Roman Kornev (National Clearing Centre, Sberbank (Switzerland) AG, Russian Agricultural Bank) Director +7 495 956 7016 Anton Lopatin (Sberbank of Russia) Director +7 495 956 70 96 Sergey Popov (Rosbank) Associate Director +7 495 956 9981 Maria Kuraeva (Subsidiary Bank Sberbank of Russia JSC, HSBC Bank (RR) LLC) Associate Director +7 495 956 5575 Dmitri Vasiliev (Gazprombank (Switzerland) Ltd) Director +7 495 956 5576 Artur Szeski (Sberbank Europe AG) Senior Director +48 22 338 6292 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; Peter Fitzpatrick, London, Tel: +44 20 3530 1103, Email: peter.fitzpatrick@fitchratings.com. Additional information is available on www.fitchratings.com Applicable Criteria Global Bank Rating Criteria (pub. 25 Nov 2016) here Global Non-Bank Financial Institutions Rating Criteria (pub. 10 Mar 2017) here Related Research Fitch Revises 23 Russian Financial Institutions' Outlooks to Positive on Sovereign Change here Additional Disclosures Dodd-Frank Rating Information Disclosure Form here Solicitation Status here#solicitation Endorsement Policy 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 WEB SITE AT WWW.FITCHRATINGS.COM. PUBLISHED RATINGS, CRITERIA, AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. 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In issuing and maintaining its ratings and in making other reports (including forecast information), Fitch relies on factual information it receives from issuers and underwriters and from other sources Fitch believes to be credible. Fitch conducts a reasonable investigation of the factual information relied upon by it in accordance with its ratings methodology, and obtains reasonable verification of that information from independent sources, to the extent such sources are available for a given security or in a given jurisdiction. The manner of Fitch’s factual investigation and the scope of the third-party verification it obtains will vary depending on the nature of the rated security and its issuer, the requirements and practices in the jurisdiction in which the rated security is offered and sold and/or the issuer is located, the availability and nature of relevant public information, access to the management of the issuer and its advisers, the availability of pre-existing third-party verifications such as audit reports, agreed-upon procedures letters, appraisals, actuarial reports, engineering reports, legal opinions and other reports provided by third parties, the availability of independent and competent third- party verification sources with respect to the particular security or in the particular jurisdiction of the issuer, and a variety of other factors. Users of Fitch’s ratings and reports should understand that neither an enhanced factual investigation nor any third-party verification can ensure that all of the information Fitch relies on in connection with a rating or a report will be accurate and complete. Ultimately, the issuer and its advisers are responsible for the accuracy of the information they provide to Fitch and to the market in offering documents and other reports. In issuing its ratings and its reports, Fitch must rely on the work of experts, including independent auditors with respect to financial statements and attorneys with respect to legal and tax matters. Further, ratings and forecasts of financial and other information are inherently forward-looking and embody assumptions and predictions about future events that by their nature cannot be verified as facts. As a result, despite any verification of current facts, ratings and forecasts can be affected by future events or conditions that were not anticipated at the time a rating or forecast was issued or affirmed. The information in this report is provided “as is” without any representation or warranty of any kind, and Fitch does not represent or warrant that the report or any of its contents will meet any of the requirements of a recipient of the report. A Fitch rating is an opinion as to the creditworthiness of a security. This opinion and reports made by Fitch are based on established criteria and methodologies that Fitch is continuously evaluating and updating. Therefore, ratings and reports are the collective work product of Fitch and no individual, or group of individuals, is solely responsible for a rating or a report. The rating does not address the risk of loss due to risks other than credit risk, unless such risk is specifically mentioned. 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