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Moody's changes Rodovid Bank's (Ukraine) review for downgrade to review with direction uncertain

November 11, 2009 Moody's Investors Service
London, 10 November 2009 -- Moody's Investors Service said today that it
is maintaining its rating review of Rodovid Bank. However, the direction
of the review has been changed to uncertain, from a possible downgrade.

On the 20th of March 2009, Rodovid Bank's deposit ratings were downgraded
to Caa2 from B3 and placed under review for further downgrade. This
rating action was driven by the payment moratorium imposed on Rodovid
Bank by the National Bank of Ukraine (NBU). At that time, the bank's
financial strength rating (BFSR) was also downgraded from E+ to E with a
stable outlook.

Today's announcement regarding the direction of the review was prompted
by the Ukrainian government's recent announcement that the deposits and
most of the performing loans of a troubled Ukrainian bank - Ukrprombank,
would be transferred to Rodovid Bank. The amount of the deposits to be
transferred is expected to be about UAH7 billion (USD875 million). This
additional obligation, if assumed by the bank, would represent a
significant increase of its outstanding liabilities (UAH 7.5 billion at
end Q3 2009). Of importance to the ratings of Rodovid Bank is that the
transfer of assets and liabilities would be accompanied with a
substantial capital and liquidity injection from the government. The
officials indicated that the deposit transfer and recapitalisation of
Rodovid Bank will likely be completed in November 2009.

Moody's believes that these developments increase the likelihood for
Rodovid Bank to be recapitalised and start to operate as a going concern.
Therefore a review of the ratings with direction uncertain is more
appropriate.

Moody's expects that if the transfer does materialise, it is likely to be
concluded by January 2010, i.e. before the presidential elections in
Ukraine, and to be accompanied by an adequate capitalisation and
liquidity injection into Rodovid Bank. In this event, Moody's is likely
to conclude its rating review by upgrading Rodovid's BFSR and deposit
ratings.

However, if the transfer of the deposits does not materialise and the
payment moratorium on Rodovid Bank's liabilities is maintained, this may
exert further negative pressure on the bank's ratings. Likewise, a
transfer of Ukrprombank's deposits and loans to Rodovid Bank without an
adequate capital and liquidity injection would also have negative
implications for Rodovid Bank's ratings.

The previous rating action on Rodovid Bank was implemented on 20 March
2009, when Moody's downgraded the bank's BFSR to E from E+, its deposit
ratings to Caa2 from B3, and its National Scale Rating (NSR) to B3.ua
from Baa3.ua. At that time, the bank's deposit ratings remained on review
for possible further downgrade.

The principal methodologies used in rating Rodovid Bank were "Bank
Financial Strength Ratings: Global Methodology" and "Incorporation of
Joint-Default Analysis into Moody's Bank Ratings: A Refined Methodology."
These can be found at www.moodys.com in the Rating Methodologies
sub-directory under the Research & Ratings tab. Other methodologies and
factors that may have been considered in the process of rating these
issuers can also be found in the Rating Methodologies sub-directory on
Moody's website.

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