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Moody's assigns B2/NP/E+/A3.ua ratings to Dongorbank (Ukraine)

September 06, 2006 | Cbonds

First-time ratings

Moody's Investors Service has assigned the
following global scale ratings to JSC Dongorbank ("DGB" or "the bank"):
B2 long-term and Not-Prime short-term foreign currency deposit ratings
and an E+ financial strength rating ("FSR"). At the same time, Moody's
has assigned an A3.ua long-term national scale rating ("NSR") to DGB.

Moody's has also assigned an A3.ua NSR to the local currency-denominated
bonds to be issued by DGB, which will represent a senior unsecured claim
on the bank. The outlook for all assigned global scale ratings is stable.

According to Moody's, the B2/Not Prime global scale local currency
ratings reflect global default and loss expectation and are not
constrained by any foreign currency transfer risk, while the A3.ua
national scale rating reflects the standing of the bank's credit quality
relative to its domestic peers.

Moody's notes that the ratings of DGB reflect its small size, its limited
franchise and its large share of business with the SCM group, which in
addition to DGB also includes a sister bank (First Ukrainian
International Bank - FUIB) and a number of industrial assets. They are
also constrained by the high levels of concentration on both sides of the
bank's balance sheet, as well as its modest capitalisation.

However, the ratings are supported by Moody's expectation of an
improvement in the bank's risk management and corporate governance thanks
to the ongoing incorporation of new procedures and reasonable levels of
profitability, resulting from relatively cheap liabilities and adequate
asset quality.

The bank's B2/Not Prime long- and short-term foreign currency deposit
ratings are directly linked to its FSR and do not incorporate any element
of government support, given its low importance for the Ukrainian banking
sector and economy. Support from the shareholders is possible but the
probability is not significant.

Any significant development of the bank's franchise would, if accompanied
by improved financial fundamentals, be likely to have positive rating
implications, although Moody's does not expect this to materialise in the
near term. Conversely, any significant asset quality and/or liquidity
problems would have negative rating implications. However, the FSR does
not present much downside potential in the near term.

Headquartered in Donetsk, Eastern Ukraine, an industrial area, Dongorbank
reported total consolidated assets of US$433 million and total equity of
US$54 million under IFRS as of 31 December 2005 and ranked 25th by total
assets in the country (among the 158 Ukrainian banks). The bank is a part
of the SCM group, a large financial-industrial group owned by Rinat
Akhmetov, a prominent Ukrainian businessman.

Company: Dongorbank

Full company namePublic Joint-Stock Company "Dongorbank"
Country of riskUkraine
IndustryBanks

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