01 February 2004 16:32
RUSSIA: RATINGS OF RUSSIAN BANK FOR DEVELOPMENT
Moody's Investors Service has assigned Ba3/NP foreign currency deposit ratings and an E+ Financial Strength
Rating (FSR) to the Russian Bank for Development (RBD). All ratings carry stable outlooks. According to Moody's,
the Ba3 long-term deposit rating assigned to the Russian Bank for Development is notched upwards in reflection of the
expectation of some level of support for the bank from the government authorities in case of difficulty. RBD is owned by
the Russian government and has as its main mission the development and financing of government prioritised key sectors
and projects rather than profit maximisation. However, RBD's development mission is not supported by a wider
government guarantee. RBD issues credits purely on a commercial basis, with the exception of the loan tenure. The bank
will be issuing longer-term instruments -- selectively guaranteed by the government -- to be able to issue credits with
extended maturities. RBD is in direct competition with other commercial banks in the majority of its activities -- with
the exception of lending to small and medium-sized enterprises (SMEs) where RBD issues credits through approved regional
banks and assumes the risk of the intermediary instead of the final borrower. The bank is also licensed to collect
customer deposits and it plans to increase the share of such deposits in its funding. In Moody's view, such an
operating framework is not typical for a bank deemed to play a development role in the economy. The E+ financial
strength rating (FSR) is supported by very high capitalisation and liquidity. The FSR is constrained by the bank's
small size, lack of diversification and short track record, concludes Moody's. Russian Bank for Development is
headquartered in Moscow and reported total USGAAP-consolidated assets of US$207.2 million at 30 September 2003.
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