(The following statement was released by the rating agency)
Dec 18 -
-- In September 2012, JSC VTB Bank (VTB) increased its stake in
TransCreditBank to 99.6% and plans to accelerate the bank's operational and
-- We think it likely that TransCreditBank will be legally merged into
VTB's retail subsidiary by year-end 2013, and therefore now view the bank as a
"core" subsidiary of VTB.
-- We are raising our long- and short-term ratings on TransCreditBank to
'BBB/A-2' from 'BBB-/A-3'.
-- The stable outlook mirrors that on VTB.
On Dec. 18, 2012, Standard & Poor's Ratings Services raised its long- and
short-term counterparty credit ratings on TransCreditBank to 'BBB/A-2' from
'BBB-/A-3'. At the same time, we affirmed our 'ruAAA' Russia national scale
rating on the bank. The outlook is stable.
The upgrade reflects our view that TransCreditBank is now a "core" subsidiary
of JSC VTB Bank (VTB; BBB/Stable/A-2, ruAAA). Previously, we viewed
TransCreditBank as a "highly strategic" subsidiary. In line with our criteria,
we now equalize our ratings on TransCreditBank on with those on its parent,
reflecting the almost certain likelihood that VTB would support
TransCreditBank if needed. The ratings on the two entities will move in tandem
as long as TransCreditBank maintains its "core" status.
VTB acquired TransCreditBank, one of Russia's largest 15 banks in terms of
assets, in 2010 and has since been gradually integrating it within its
operations and risk framework. VTB raised its stake in TransCreditBank to
99.6% from 77.8% in September 2012 by purchasing the remaining stakes held by
JSC Russian Railways (BBB/Stable/A-2), the historic owner of TransCreditBank.
This move is the last in a series of stake purchases initiated in 2010.
We expect the operational and strategic integration of TransCreditBank to
accelerate in 2013, culminating with the legal merger, expected in November
2013, of TransCreditBank within VTB 24 (not rated), the retail arm of VTB. We
understand that TransCreditBanks's corporate banking activities will also be
transferred to VTB. From a business perspective, TransCreditBank will start
distributing VTB's banking products across its own network, even before the
merger, which will increase the synergies between both entities.
In our view, TransCreditBank operates in business lines that are integral to
VTB's strategy and strengthen the group's commercial banking franchise,
notably thanks to its historically privileged relationships with Russian
Railways and its employees. In turn, VTB has already shown its commitment to
TranscreditBank through a Russian ruble (RUB)7.5 billion Tier 1 capital
increase in February 2012, long-term subordinated loans, and ongoing funding
and liquidity support. TransCreditBank accounts for a significant portion of
VTB's balance sheet, comprising about 9% of total assets and close to 10% of
total equity at midyear 2012. Its market reputation has been closely linked to
that of VTB since its acquisition.
Given the strengthened operational integration and planned merger with VTB 24,
we do not think it necessary to continue reviewing TransCreditBank's
stand-alone creditworthiness, in line with what we typically do for most
The outlook is stable and reflects that on VTB. In turn, the outlook on VTB
mirrors that on Russia (foreign currency BBB/Stable/A-2; local currency
BBB+/Stable/A-2; Russia national scale 'ruAAA'), the bank's main owner. Any
rating action or outlook revision on VTB will automatically lead to a similar
action on TransCreditBank.
Related Criteria And Research
-- Banks: Rating Methodology And Assumptions, Nov. 9, 2011
-- Banking Industry Country Risk Assessment Methodology And Assumptions,
Nov. 9, 2011
-- Group Rating Methodology And Assumptions, Nov. 9, 2011
-- Bank Hybrid Capital Methodology And Assumptions, Nov. 1, 2011
-- Bank Capital Methodology And Assumptions, Dec. 6, 2010
-- Rating Government-Related Entities: Methodology And Assumptions, Dec.
-- Full analysis on the Russian Federation, July 27, 2012
-- Full analysis on JSC VTB Bank, June 15, 2012
-- Full analysis on TransCreditBank, Nov. 2, 2012
-- Banking Industry Country Risk Assessment: Russia, March 19, 2012
-- Capital And Funding Constraints Hold Back Russian Banks' Resurgence,
Dec. 3, 2012
Counterparty Credit Rating BBB/Stable/A-2 BBB-/Stable/A-3
Certificate Of Deposit BBB BBB-
Senior Unsecured BBB BBB-
Russia National Scale ruAAA/--/--
Senior Unsecured ruAAA