28 April 2004 04:28
S&P rates Rosbank `B-/C`, outlook stable
MOSCOW. April 28 (Interfax) - Standard & Poor's Ratings Services assigned its 'B-/C' long-and
short-term counterparty credit ratings to Rosbank. The outlook is stable, the agency said in a press release.
Standard & Poor's also assigned its 'ruBBB-' Russia national scale rating to Rosbank.
The ratings on Rosbank reflect the bank's ownership by the powerful Russia-based Interros (not rated) financial
industrial group (FIG) and the bank's good growth potential, particularly in retail banking due to the ongoing
consolidation of Rosbank's sister banking group, the OVK group of banks (OVK), recently acquired by Interros.
"Negative rating factors include Rosbank's relatively weak financial performance, high--albeit gradually
decreasing--concentration in loans and funding, and the potential downside effect of the integration of OVK, itself an
inefficient banking institution," said Standard & Poor's credit analyst Irina Penkina.
With $2.5 billion of assets as of September 30, 2003, Rosbank is a large private sector Russian bank owned and
controlled by Interros, the largest non-energy FIG, whose largest asset is Norilsk Nickel (not rated).
In October 2003, Interros acquired OVK for approximately $200 million with a plan to integrate it under
Rosbank's brand name in 2005. While OVK's asset size is only about one-fifth of that of Rosbank, it possesses
a countrywide distribution network, and operates in the small business and retail segments where Rosbank is not present.
A merger with OVK would provide Rosbank with broader access to regional marketplaces and retail clientele, thereby
diversifying Rosbank's concentrated corporate banking business. Nevertheless, OVK is at present an underused and
inefficient network with more than 10,000 employees and only $300 million in deposits.
"The stable outlook on Rosbank reflects the bank's potential to significantly diversify its operations,
revenue resources, and clientele through the forthcoming merger with OVK," said Ms. Penkina. "The merger will
be challenging for management, however, particularly in terms of its ability to reactivate and modernize the OVK branch
network and expand a profitable and good quality retail customer base, while keeping control of the expense base,"
she added.
Rosbank's profitability is not likely to improve over the next two years during the integration with OVK. During
that period, Rosbank will be particularly vulnerable to any slowdown in Russia's economic expansion. In the longer
term, OVK's consumer finance and SME lending lines have the potential to generate better profits than
Rosbank's core corporate banking line and improve the bank's overall financial profile. [RU ASIA EUROPE EEU
EMRG BNK AAA]
[Interfax] |
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