Press Releases

July 09, 2002

Interfax Rating Agency assigns national ratings to UralSib Bank, Moscow Credit Bank

Russia's Interfax Rating Agency has assigned national rating scale credit ratings to UralSib Bank of Ufa and Moscow Credit Bank.
    The agency has assigned long-term A2 (rus) and short-term RUS-2 credit ratings to UralSib. Moscow Credit Bank has been assigned long-term and short-term ratings of respectively Baa3 (rus) and RUS-3.
    The banks rated by the Interfax Rating Agency tend to be market-oriented and open, agency analysts said. The desire of banks to receive a credit rating shows they are interested in attracting new clients. Disclosure of information about their operations is an important factor in helping to expand and diversify banks' businesses.
    The credit ratings assigned to UralSib and Moscow Credit Bank are fairly high ratings under the agency's national scale. The difference in the banks' ratings reflects, among other factors, different degrees of diversification and levels of support that the banks could receive in a crisis from the government or shareholders.
    The Interfax Rating Agency analyzed the credit-worthiness of the banks in line with international standards within the context of a strategic partnership with international rating agency Moody's Investors Service. The ratings reflect the opinion of Interfax Rating Agency analysts regarding the banks' credit-worthiness, based on an analysis of the financial health, market position, strategy, management quality and level of support the bank could receive from shareholders or the government. The agency will monitor the banks and notify whether the ratings are affirmed or changed.
    The agency's national ratings, as opposed to international ratings, more accurately reflect a borrower's credit risk on the Russian market by excluding the influence of country risks and comparing borrowers in detail. The Interfax Rating Agency's long-term ratings correspond to the rating symbols used by Moody's, accompanied by the suffix (rus) to reflect that they are internal Russian ratings.
    Interfax Rating Agency, which specializes in assessing credit risks in Russia, is part of the international information group Interfax.

Interfax Rating Agency's Rating Scale

Long-term Ratings

    Aaa (rus)Obligors and obligations rated Aaa (rus) have the extremely high creditworthiness relative to other Russian obligors and obligations.
    Аa (rus)Very high creditworthiness relative to other Russian obligors/obligations.
    А (rus)High creditworthiness relative to other Russian obligors/obligations. May be adversely affected by unfavorable external conditions.
    Baa (rus)Sufficient creditworthiness of Baa (rus)-rated obligors/obligations relative to other Russian obligors/obligations. Obligors/obligations in this rating category are able to service and repay debt under favorable conditions. However, their creditworthiness is more susceptible to adverse changes in external conditions.
    Вa (rus)Insufficiently stablecreditworthiness relative to other Russian obligors/obligations. Obligors/obligations in this rating category are able to meet their financial obligations under favorable conditions, but may find it difficult under adverse circumstances.
    В (rus)Unstable creditworthiness relative to other Russian obligors/obligations. Obligors are sufficiently able to meet their financial obligations under favorable conditions, but their creditworthiness is very likely to be eroded under unfavorable conditions.
    Сaa (rus)Low creditworthiness relative to other Russian obligors/obligations, fully dependent on favorable external conditions. It would be very difficult for obligors to meet their obligations under unfavorable conditions.
    Сa (rus)Very low creditworthiness relative to other Russian obligors/obligations. Problems with meeting obligations are probable even under favorable conditions. Under adverse circumstances, such problems may result in default on obligations.
    С (rus)Extremely low creditworthiness relative to other Russian obligors/obligations: Even under favorable conditions, obligors may default on their obligations.
    The ratings from 'Aa (rus)' to 'Caa (rus)' are accompanied with modifiers 1, 2 and 3 to indicate that an obligor/obligation has a higher, mid-range or lower ranking in the respective rating category.

Short-term Ratings

    RUS-1Extremely high creditworthiness with regard to short-term debt relative to other Russian obligors/obligations.
    RUS-2High creditworthiness with regard to short-term debt relative to other Russian obligors/obligations.
    RUS-3Average creditworthiness with regard to short-term debt relative to other Russian obligors/obligations. Adverse changes in external conditions may result in higher credit risks.
    RUS-4Below-average creditworthiness with regard to short-term debt relative to other Russian obligors/obligations.

Interfax Rating Agency assigns Moscow Credit Bank Baa3 (rus)
long-term rating

Russia's Interfax Rating Agency has assigned national scale credit ratings to Moscow Credit Bank. The agency has assigned Moscow Credit Bank long-term and short-term ratings of respectively Baa3 (rus) and RUS-3.
    The bank has a stable revenue niche on the banking market of Moscow and the surrounding region, agency analysts said. The bank's main clients are small and medium businesses in the Moscow area, primarily in the retail and wholesale sector, which stands out with its stable, high revenues. The risk of the bank's industry concentration is alleviated by the diverse specializations of the bank's borrowers, which range from foodstuffs to construction materials. The bank's product range, including credit products, has been developed especially for its target client group, which ensures the stability of the client base. The bank has built an effective credit risk management system, taking into account the specificity of its clients' businesses, the agency's analysts said.
    The profitability of its business gives Moscow Credit Bank a considerable safety margin amid negative changes in the business climate, the agency reckons. Another factor of reliability are the bank's high capitalization and considerable loan loss reserves.
    A considerable part of the bank's resource base, consisting of clients' settlement accounts, is fairly stable. Term deposits make up about 30% of the bank's liabilities. However, the bank has a relatively large creditor (9% to 12% of liabilities), the stability of whose funds is difficult to gauge. This liability structure could become a problem for the bank's credit-worthiness in crisis conditions, the agency said.
    Shareholder resources accessible to the bank in times of trouble are limited, so the bank mostly relies on its own resources, the agency said.
    The bank's short-term credit-worthiness is supported by a quality loan portfolio and attractive client base, combined with high capitalization. Systemic risks present the greatest danger to the bank in the short-term.
    The Baa3 (rus) national scale long-term rating reflects sufficient credit-worthiness in comparison to other Russian borrowers. It indicates that borrowers can meet financial obligations in favorable conditions, but they are vulnerable to negative changes in external conditions.
    The RUS-3 national scale short-term rating reflects average credit- worthiness among Russian borrowers. Changes in external conditions could increase the credit risk.
    Interfax Rating Agency, which specializes in assessing credit risks in Russia, is part of the international information group Interfax, the leading provider of political and business news from the emerging markets of Europe and Asia. The Interfax Rating Agency in October 2001 signed a strategic partnership agreement with international rating agency Moody's Investors Service, which in June 2002 announced the acquisition of about 20% of shares in the Interfax Rating Agency.

     Russia's Interfax Rating Agency has assigned long-term A2 (rus) and short-term RUS-2 credit ratings under a national rating scale to commercial bank UralSib, based in the city of Ufa.
    The long-term rating reflects the bank's firm leading position on the banking market of the Russian republic of Bashkortostan, and its successful role as a republican bank, servicing virtually significant financial flows in the local economy. UralSib's rating is closely tied to the credit-worthiness of the government of Bashkortostan, which holds a controlling 66% stake in the bank. Bashkortostan is one of the few steadily developing Russian regions whose economies are dominated by oil and related industries. The bank's largest Bashkir clients, as the bank itself, are controlled by the republic's government. The bank's business in Bashkortostan is quite predictable, stable and well-managed.
    The acceptable quality of the bank's loan portfolio is the result of a balanced lending policy, work with key companies in the republic and low concentration of credit risks.
    The rating is constrained by risks related to the bank's expansion outside of Bashkortostan to the competitive markets in other Russian regions. Despite the obvious advantages of expansion, UralSib faces greater risks related to ensuring control of branches and subsidiaries, control over expenditures, and competition for clients in regions dominated by other banks.
    UralSib's short-term rating reflects the bank's strong ability to control key risks in the short-term (up to one year), and its considerable reserves of strength to withstand even serious changes in the economic climate.
    An A2 (rus) long-term rating under the Interfax Rating Agency's national scale reflects a borrower's strong ability to service and repay debt obligations, though this ability could be weakened by negative external conditions.
    A RUS-2 short-term rating under the agency's national scale reflects strong credit-worthiness relative to other Russian borrowers and debt.
    The Interfax Rating Agency, which specializes in assessing credit risks in Russia, is part of the international information group Interfax, the leading provider of political and business news from the emerging markets of Europe and Asia. The Interfax Rating Agency in October 2001 signed a strategic partnership agreement with international rating agency Moody's Investors Service, which in June 2002 announced the acquisition of about 20% of shares in the Interfax Rating Agency.

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