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March 18 (Reuters) - (The following statement was released by the rating agency)
Fitch Ratings has placed Ukraine-based Ukrsotsbanks’s (Ukrsots) ‘B-’ Long-term local currency Issuer Default Rating (IDR) and ‘AAA(ukr)’ National Long-term Rating on Rating Watch Negative (RWN). A full list of rating actions is provided at the end of this commentary.
The rating action reflects the potential sale of Ukrsots, as recently announced by its ultimate parent UniCredit S.p.A. (UniCredit, BBB+/Negative). Unicredit currently owns 98.64% of Ukrsots through its Vienna subsidiary UniCredit Bank Austria AG (A/Stable).
UniCredit has put Ukrsots in the category ‘held for sale’ in its group reporting for 2013 and simultaneously created an impairment provision following the reclassification of this investment. UniCredit had indicated that a sale within the next 12 months was possible prior to the recent escalation of the political crisis in Ukraine. The RWN reflects Fitch’s view that shareholder support will probably become less reliable if the bank is sold, in particular if the sale is to local shareholders.
Fitch expects to resolve the RWN once the sale, should it take place, is completed. If, in Fitch’s view, support from new shareholders cannot be factored into the ratings, then the Long-term local currency IDR is likely to be downgraded to the level of the bank’s Viability Rating (currently ‘ccc’).
Fitch believes that UniCredit will likely have a high propensity to provide support to Ukrsots prior to any sale. However, the ability of the bank to utilise this support to service its obligations could be constrained by the introduction of transfer and convertibility or other capital restrictions in Ukraine if the crisis in the country intensifies.
The rating actions are as follows:
Long-term foreign currency IDR: affirmed at ‘CCC’
Long-term local currency IDR: ‘B-'; placed on Rating Watch Negative
Senior unsecured local currency debt: ‘B-'/Recovery Rating ‘RR4’/‘AAA(ukr)’ placed on Rating Watch Negative
Upcoming senior unsecured local currency debt: ‘B-(EXP)'/Recovery Rating ‘RR4’/‘AAA(EXP)(ukr)', placed on Rating Watch Negative
Short-term foreign currency IDR: affirmed at ‘C’
Support Rating: affirmed at ‘5’
Viability Rating: unaffected at ‘ccc’
National Long-term rating: ‘AAA(ukr)'; placed on Rating Watch Negative