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Moody's downgrades Forum Bank to B3, outlook negative

August 2, 2012 Moody's Investors Service
London, 02 August 2012 -- Moody's Investors Service has today downgraded
Forum Bank's long-term local-currency deposit rating to B3 from B2. The
outlook on the rating remains negative. Concurrently, the rating agency
downgraded the bank's National Scale Rating (NSR) to Baa3.ua from A3.ua.

The rating action follows the recent announcement by its parent bank,
Commerzbank (A3/P-2/D+/baa3, negative), that it plans to sell its stake
in Forum Bank to a Ukrainian investment holding company, Smart Group
(unrated). Forum Bank's bank financial strength rating is unaffected by
today's rating action.


Today's rating action follows Commerzbank's announcement that it had
reached an agreement to sell its approximately 96% stake in Forum Bank to
Smart Group. In light of this development, Moody's has removed the
one-notch rating uplift which is factored into Forum Bank's long-term
deposit ratings from the assumption of parental support. This has led to
a downgrade of the bank's local-currency long-term deposit rating to B3
from B2, which is now in line with the bank's standalone credit strength
of b3.

While information on Forum Bank's new shareholder is currently limited
and the announced transaction is still subject to the approval of the
regulatory authorities, Moody's says that departure of Commerzbank
(Germany's second-largest private banking group) has negative
implications for the bank's risk profile. Namely, there is a risk that
changes in the ownership structure could lead to weakening corporate
governance practices and increase related-party transactions. In
addition, the bank's capital, liquidity and funding profile could also
weaken following the sale, as Forum Bank had benefited from parental
capital and funding support (albeit decreasing in recent years) in the
past. Over the next several months, Moody's will closely monitor the
implications of the announced transaction on Forum Bank's financial
profile, particularly focusing on the bank's liquidity and capitalisation.
Company — Forum Bank
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