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Fitch Revises National Reserve Bank's Outlook to Stable; Withdraws Ratings
January 31, 2014 / 2:57 PM / in 4 years

Fitch Revises National Reserve Bank's Outlook to Stable; Withdraws Ratings

(The following statement was released by the rating agency) MOSCOW, January 31 (Fitch) Fitch Ratings has revised Russia-based National Reserve Bank’s (NRB) Outlook to Stable from Negative and affirmed its Long-term Issuer Default Ratings (IDRs) at ‘B-’. Fitch has also withdrawn NRB’s ratings, as the bank has chosen to stop participating in the rating process. Fitch will no longer provide ratings or analytical coverage of NRB. A full list of rating actions is provided at the end of this commentary. KEY RATING DRIVERS - IDRS, NATIONAL LONG-TERM RATING AND VIABILITY RATING The revised Outlook reflects the bank’s recent deleveraging further improving its loss absorption capacity, its strengthened liquidity and repayment of almost all its third-party liabilities. The ‘B-’ Long-term IDRs reflect NRB’s individual strength as reflected in its Viability Rating (VR) of ‘b-’. The VR reflects the bank’s weak corporate governance, a narrow and concentrated franchise, and high uncertainty around its future strategy. It also reflects operational risks relating to the wind-down of the business, the bank’s weak asset quality and its poor profitability. At end- 2013, the bank’s equity reported under the Russian accounting standards (RAS) equalled a high 59% of its total assets. The total statutory capital adequacy ratio was 27.4%. A substantial proportion of equity (72%) was, however, tied up in weakly secured related-party loans, real-estate assets and investments. Core profitability remains a weakness as the business’s contraction has depressed earnings. A meaningful performance improvement may only result from significant, albeit gradual, cost reduction. Liquidity pressure has been alleviated with the repayment of nearly all of the third-party liabilities, including repo facilities and customer deposits. The bank’s liquidity profile is further underpinned by a fairly solid buffer of highly-liquid assets relative to the third-party deposits. KEY RATING DRIVERS - SUPPORT RATING AND SUPPORT RATING FLOOR The affirmation of the Support Rating at '5' and the Support Rating Floor at 'No Floor' reflects the bank's low systemic importance and Fitch's view that support from either the shareholder or the Russian authorities cannot be relied upon. The rating actions are as follows: Long-Term foreign and local currency IDRs: affirmed at 'B-'; Outlooks revised to Stable from Negative; and withdrawn Short-Term foreign currency IDR: affirmed at 'B'; and withdrawn National Long-Term Rating: affirmed at 'BB-(rus)'; Outlook revised to Stable from Negative; and withdrawn Viability Rating: affirmed at 'b-'; and withdrawn Support Rating: affirmed at '5'; and withdrawn Support Rating Floor: affirmed at 'No Floor'; and withdrawn Contact: Primary Analyst Roman Kornev Associate Director +7 495 956 7016 Fitch Ratings CIS Limited 26 Valovaya Street Moscow 115054 Secondary Analyst Ruslan Bulatov Analyst +7 495 956 9982 Committee Chairperson James Longsdon Managing Director + 44 20 3530 1076 Media Relations: Julia Belskaya von Tell, Moscow, Tel: +7 495 956 9908, Email:; Hannah Huntly, London, Tel: +44 20 3530 1153, Email: Additional information is available at Applicable criteria, 'Global Financial Institutions Rating Criteria', dated 15 August 2012, 'National Scale Ratings Criteria', dated 30 October 2013 and 'Evaluating Corporate Governance', dated 12 December 2012, are available at Applicable Criteria and Related Research: Global Financial Institutions Rating Criteria here National Scale Ratings Criteria here Evaluating Corporate Governance here Additional Disclosure Solicitation Status here ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

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