Moody's Takes Multiple Rating Actions on Russian Banks

April 2, 2013 8:39am ET By Sarka Halas

Moodys Bank Ratings: placed the long-term senior debt and deposit ratings of Russian banks on review for downgrade Tuesday, citing the Russian government's potentially reduced ability to support them if needed.

Moody's Investors Service placed the long-term senior debt and deposit ratings of Russian banks on review for downgrade Tuesday, citing the Russian government's potentially reduced ability to support them if needed. Sberbank (SBER.RS) rated A3, Bank VTB (VTBR.RS) rated Baa1, VTB24 rated Baa1, and Russian Agricultural Bank rated Baa1 are all on review for downgrade. Moody's said the risk of a decline in oil prices could affect the Russian government's ability to generate enough cash to help the country's banks if they needed it. If the price of oil was to fall, the Russian government would also be under pressure to support other entities such as large industrial companies and sub-sovereigns. Moody's however, expects high oil prices in 2013.

The ratings firm also cited the progress of the government's bank privatization plans as reason for the review, seeing a risk over how willing the government would be to provide systemic support to banks. Moody's said the privatization plan could lead to the inclusion of market solutions regarding the provision of support for large troubled banks, adding that Russian banks face risks related to the euro-zone crisis, such as those recently highlighted by negative developments in Cyprus. Moody's also put on review the subordinated debt ratings of six Russian banks, including Gazprombank (GZPR.RS) and Alfa Bank among other financial entities. The move was driven by its concerns that the risk profile of junior debt may have increased in Russia due to the global trends of imposing losses on junior creditors as part of bank bailouts orchestrated by governments. Write to Sarka Halas at sarka.halasova@dowjones.com