S&P: Russia-Based MDM Bank Long-Term Rating Lowered To 'BB-'; Remains On CreditWatch Negative; 'B' Short-Term Rating Affirm - 12 Мая 2009 - Крупный бизнес. Финансы.
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S&P: Russia-Based MDM Bank Long-Term Rating Lowered To 'BB-'; Remains On CreditWatch Negative; 'B' Short-Term Rating Affirm
17:32
LONDON (Standard & Poor's) April 16, 2009--Standard & Poor's Ratings Services said today that it lowered its long-term counterparty credit rating on Russia-based MDM Bank (MDM) to 'BB-' from 'BB'. Furthermore, the long-term rating remains on CreditWatch, where it was placed with negative implications on Dec. 3, 2008, following the announcement that the shareholders of MDM and URSA Bank (not rated) planned to merge the two banks. At the same time, Standard & Poor's affirmed its 'B' short-term counterparty credit rating on the bank.
"The downgrade is driven by the increased systemic risks in the Russian economy, which have led to a more strained financial performance and liquidity position of MDM," said Standard & Poor's credit analyst Sergey Dementiev.
More specifically, it reflects the bank's weaker loan performance, concentrated wholesale funding base, negative earnings trend, and integration challenges. At the same time, the ratings are supported by the bank's strong competitive position, ample liquidity, prudent cost management, and good corporate governance.
The ratings reflect MDM's stand-alone credit profile and do not include any uplift for prospective extraordinary external support, either from the shareholders or the government.
The maintenance of the CreditWatch placement with negative implications is driven by the merger with URSA. There are high execution and refinancing risks stemming from this transaction, which will weaken MDM's credit profile and put pressure on its liquidity because of URSA's higher risk profile. Integration of both institutions on URSA's banking platform will be a challenging task and is expected to be complete within 12-18 months.
"We expect to resolve the CreditWatch placement with negative implications within six months, upon the legal merger of MDM and URSA," added Mr. Dementiev. At this stage, we would not expect to lower the long-term rating on MDM by more than one notch. Should the transaction with URSA be abolished, the ratings would be affirmed and removed from CreditWatch, and the outlook would likely be negative.
