Fitch Ratings has downgraded
The rating actions follow Fitch's downgrade of
Sanctions imposed by the US and the EU put significant pressure on Russian banks' profiles, undermining their ability to service obligations in foreign currency, and in the medium term could lead to a significant weakening of lenders' financial profiles.
Rating Withdrawals
Fitch has withdrawn the Support Ratings of all three banks, as they are no longer relevant to the agency's coverage following the publication of its updated Bank Rating Criteria on
Key Rating Drivers
The banks' IDRs are now driven by their VRs. The downgrades of the banks' IDRs to 'B' and VRs to 'b' capture the heightened country and sovereign risks and the close linkage of their credit profiles with that of the Russian sovereign.
The RWNs on the banks' ratings mirror that on the sovereign rating, but also reflect increased pressures on the banks' profiles as a result of recent sanctions imposed against
Key Rating Driver 1
Zenit's and MTSB's SSRs of 'ccc+' reflect the possibility that the banks will be supported by their shareholders,
Almazregienbank's SSR of 'ccc' reflects its limited strategic importance for
The RWNs on the banks' SSRs mirror that on the parents' ratings.
Key Rating Driver 2
Zenit's senior unsecured debt rating has been downgraded to 'B'/'RR4' and placed on RWN in line with the bank's IDRs.
Rating Sensitivities
Factors that could, individually or collectively, lead to negative rating action/downgrade:
The banks' IDRs and debt ratings could be downgraded if their VRs are downgraded. The VRs are primarily sensitive to changes in the sovereign rating. Ratings could also be downgraded in the absence of a sovereign downgrade, if the operating environment results in substantial deterioration of the banks' financial profiles.
The IDRs could also be downgraded if the banks' ability to service their obligations is impaired further by sanctions or by restrictions on payments by the Russian authorities leading to material economic losses for creditors.
The SSRs could be downgraded if the ability or propensity of the shareholders to provide support weakens.
Factors that could, individually or collectively, lead to positive rating action/upgrade:
Ratings could be upgraded or affirmed in case of a similar action on the sovereign rating.
VR ADJUSTMENTS
The operating environment score of 'b' is below the 'bb' category implied score, due to the following adjustment reason: 'sovereign rating' (negative).
Best/Worst Case Rating Scenario
International scale credit ratings of Financial Institutions and Covered Bond issuers have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of three notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of four notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from '
REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING
The principal sources of information used in the analysis are described in the Applicable Criteria.
ESG Considerations
Almazregienbank has an ESG Relevance Score of '4' for Governance Structure in view of significant exposure to related parties and
Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of '3'. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. For more information on Fitch's ESG Relevance Scores, visit www.fitchratings.com/esg
Contacts
Banks
+44 20 3530 1000
Media Relations
media.relations.emea@fitchratings.com
(C) 2022 Electronic News Publishing, source