(Repeat for additional subscribers)
Feb 27 (The following statement was released by the rating agency)
Fitch Ratings has assigned Sberbank of Russia's (Sberbank; BBB/Stable/bbb) USD1bn
"new style" subordinated debt issue with write-off features a Long-term rating of 'BBB-'.
The notes are issued by Luxembourg-based SB Capital S.A. and the proceeds are
on-lent to Sberbank under a subordinated loan agreement. The notes are due in
2024, have a 5.5% coupon paid semi-annually and are callable in five years.
The issue has coupon/principal write-down features, which will be triggered if:
(i) the bank's core Tier 1 capital adequacy ratio decreases below 2%; or (ii)
the Deposit Insurance Agency directly or indirectly acquires a controlling stake
in the bank as part of an approved bankruptcy prevention plan. The latter is
possible if a bank breaches any of its mandatory capital ratios or is in breach
of certain other liquidity and capital requirements.
KEY RATING DRIVERS
Sberbank's "new style" Tier 2 subordinated debt is rated one notch lower than
the bank's 'bbb' Viability Rating (VR). This includes (i) zero notches for
non-performance risk relative to the VR, as Fitch believes these instruments
should only absorb losses once a bank reaches, or is very close to, the point of
non-viability; and (ii) one notch for loss severity (one notch, rather than two,
as the issue will not be deeply subordinated).
For more details on Fitch's approach on rating subordinated debt issues of
Russian banks see "Implementation of New Capital Rules in Russia: Moderately
Positive, Unlikely to Lead to Rating Changes" dated 19 April 2013 at
The issue's rating is linked to Sberbank's VR. An upgrade of Sberbank's VR would
be contingent on an upgrade of the Russian Federation and the bank's continued
strong financial metrics. A downgrade of the Russia sovereign would likely
result in a downgrade of Sberbank's VR.