Moody's affirm ratings of Transcreditbank (Russia) at Ba1/Not-Prime

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. RATINGS RATIONALE 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.

• Full name
  TransCreditBank OJSC
• Registration country
  Russia
• Industry
  Banks