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Moody's downgrades Rodovid Bank to Caa2/B3.ua/E (Ukraine)

March 20, 2009 "Moody’s"
Long-term deposit ratings remain on review for possible further downgrade

London, 20 March 2009 -- Moody's Investors Service has today downgraded the
bank financial strength rating (BFSR) of Rodovid Bank to E from E+, its
long-term local currency and foreign currency bank deposit ratings to
Caa2 from B3, and its National Scale Rating (NSR) to B3.ua from Baa3.ua.
The bank's long-term deposit ratings remain on review for possible further
downgrade.

The rating action is in response to the announcement that the National Bank
of Ukraine (NBU) has taken control of Rodovid Bank following the concerns
about the bank's ability to continue its operations as a viable stand-alone
entity. The Ukrainian legislation gives the NBU powers such as limiting or
prohibiting the disposal of the banks' capital and assets and imposing
temporary restrictions on payments to creditors. The NBU has announced a
six-month moratorium on all payments to the bank's creditors.
The moratorium applies to all liabilities assumed by Rodovod Bank before the
moratorium was imposed.

In downgrading the BFSR to E from E+, Moody's explains that Rodovid Bank's
franchise and the overall credit profile have been significantly impaired
following the recently experienced material depletion of its liquid assets
and economic capitalisation as the bank witnessed substantial deposits
outflows and a sharp rise in the level of problem loans.

According to Rodovid Bank it has a preliminary agreement with the Ukrainian
government to receive a capital injection from the latter and also from a
Ukrainian Group, ISTIL (which, together, would more than double the current
capital level). On 18 March 2009 the NBU recommended that the Ukrainian
government recapitalise Rodovid Bank along with several other local banks
that operate under temporary administration together with Rodovid Bank.

The review of the ratings will focus on the materialisation of the
government support plans and the potential impact of these plans on Rodovid
Bank's capitalisation levels, liquidity position and franchise perspectives.
Any failure by Rodovid Bank to obtain liquidity and capital support would
substantially increase the likelihood of the bank's liquidation, and
therefore would result in further rating downgrades.
However, recapitalisation would have a positive impact on the bank's
financial fundamentals and might put an upward pressure on the banks'
current ratings.

The previous rating action on Rodovid Bank was implemented on 6 October
2008, when Moody's placed Rodovid Bank's E+ BFSR and B3 deposit and debt
ratings on review for possible downgrade. At that time, Moody's also
downgraded the bank's national scale rating (NSR) to Baa3.ua from Baa1.ua.

The principal methodologies used in rating Rodovid Bank are "Bank Financial
Strength Ratings: Global Methodology" and "Incorporation of Joint-Default
Analysis into Moody's Bank Ratings: A Refined Methodology", which can be
found at www.moodys.com in the Credit Policy & Methodologies directory, in
the Ratings Methodologies subdirectory. Other methodologies and factors that
may have been considered in the process of rating Rodovid Bank can also be
found in the Credit Policy & Methodologies directory.

Headquartered in Kiev, Ukraine, Rodovid Bank reported total assets of
UAH13.2 billion and total equity of UAH1.4 billion according to Ukrainian
Accounting Standards at year-end 2008.
Company — Rodovid Bank
  • Full name
    Public Joint Stock Company "Rodovid Bank"
  • Industry
    Banks