Moody's affirm ratings of Transcreditbank (Russia) at Ba1/Not-Prime
August 31, 2011 Moody's Investors Service
Ba1/Not-Prime local currency ratings are assigned; outlook on all ratings is stable
London, 31 August 2011 -- Moody's Investors Service has today affirmed the
following ratings of TransCreditBank (TCB): long-term foreign-currency
debt and deposit ratings of Ba1, long-term local currency debt rating of
Ba1, the local and foreign-currency subordinated debt ratings of Ba2 as
well as the D- standalone bank financial strength rating (BFSR; mapping
to Ba3 on a long-term scale). At the same time, Moody's assigned
Ba1/Not-Prime long and short term local currency deposit ratings. All
ratings carry a stable outlook.
Moody's assessment is primarily based on the official press releases of
the Bank VTB and TCB, on the bank's audited financial statements for
2010 prepared under IFRS and the information we received from the top
management of VTB.
According to Moody's the ratings affirmation follows Bank VTB's (VTB --
rated Baa1/Prime-2/D-, negative outlook) announcement that it had
recently acquired an additional 29% stake in TCB, thus increasing its
shareholding to 74% in July 2011 from 44% at year-end 2010. As a result,
TCB's deposit ratings now benefit from high probability of support from
VTB (see Moody's Issuer Comment, "Moody's comments on Bank VTB's planned
acquisition of Russia's TransCreditBank", published on 12 October 2010
and available on www.moodys.com).
The high probability of support from VTB is based on the (i) controlling
ownership by VTB; (ii) increasing operational integration (for example
TCB's risk function is now controlled by VTB, its board of directors is
controlled by VTB's representatives, and VTB's representatives are
included in the management board); and (iii) significant strategic fit as
the current core clients of TCB -- companies related to Russian Railways
-- are an important client segment for VTB.
Although the Russian Railways (the former controlling shareholder)
continues to control a 25% + 1 share in TCB, Moody's believes that its
willingness to provide support to TCB has substantially diminished after
it sold its majority stake in the bank. As a result, Moody's does not
incorporate any support from the Russian Railways into the ratings of TCB.
The stable outlook on TCB's long-term ratings reflects Moody's
expectation that TCB will become increasingly integrated with VTB in the
medium term, as well as possible negative pressure on TCB's standalone
credit strength. The latter could result from the planned migration of
TCB's business to VTB, according to the current integration plan.
Company — TransCreditBank
Full nameTransCreditBank OJSC