Troika Dialog Group Placed On CreditWatch Positive On Agreement For Sberbank To Acquire 100%
March 18, 2011 Standard & Poor's
PARIS (Standard & Poor's) March 16, 2011--Standard & Poor's Ratings Services said today that it has placed the 'B+' long-term counterparty credit rating and 'ruA+' long-term Russia national scale rating on Troika Dialog Group Ltd. on CreditWatch with positive implications. At the same time, we have affirmed the short-term 'B' rating on Troika Dialog.
The rating action follows the announcement that Sberbank and Troika Dialog signed a memorandum of understanding on March 11, 2011, to combine the two entities.
"The ratings on Troika Dialog, the nonoperating holding company (NOHC) of Russia's Troika Dialog Group (Troika), reflect Standard & Poor's view of the challenging Russian operating environment and Troika's dependence on business and capital markets cycles given the group's significant business and earnings concentrations," said Standard & Poor's credit analyst Ekaterina Trofimova.
Positive rating factors include Troika's leading market position in domestic and international securities sales and brokerage, high-quality staff, proactive and flexible business strategy, and good capitalization.
In accordance with our criteria, we base the ratings on Troika Dialog on the creditworthiness of the consolidated Troika companies. These companies form one of Russia's leading brokerage and investment banking groups, with total equity of about $920 million on Sept. 30, 2010 (see "Analytical Approach To Assessing Nonoperating Holding Companies," published March 17, 2009). Troika is 64% owned by a management partnership (led by the CEO Ruben Vardanian), with another 36% held by Standard Bank of South Africa Ltd. (SBSA; unsolicited public information (pi) rating 'BBBpi').
Sberbank, a state savings bank with a 27% market share of systemwide banking assets and a 47% share of retail deposits, dominates the Russian banking industry. Troika's $6 billion in assets represented only 2% of Sberbank's approximately $300 billion in assets on Dec. 1, 2010. The majority of Sberbank's shares are owned by the Central Bank of Russia.
Troika's securities brokerage and investment banking businesses in Russia are strategically attractive to Sberbank, a universal bank with its roots in retail branch banking throughout the Russian Federation.
Under the terms of the memorandum of understanding, Troika would become a wholly owned subsidiary of Sberbank.
"When the terms of the acquisition are final, we likely would raise the global and national scale ratings on Troika. The amount of the uplift would depend on our opinion of the importance of Troika to Sberbank and our opinion on the likelihood that Sberbank would support Troika if needed," said Ms. Trofimova.
We will resolve the CreditWatch placement after assessing the terms of the acquisition and the operational plans for Troika in the Sberbank group.
Company — Sber CIB
Full nameJSC Sberbank CIB