OREANDA-NEWS. According to the agency, the change in outlook is due to minimal public transparency with respect to changes in the Bank's ownership structure in mid-2013 and limited information about the capacity of its shareholders to provide support.

The rating is based on a stable circle of larger corporate clients; market positions that are developing in accordance with the Bank's new strategy; and a generally satisfactory financial condition.

Constraining factors include a lack of transparency with respect to the Bank's beneficiary owners, a business that remains more than usually concentrated by individual client, and uncertain prospects for shareholder support.

About the Bank:

Mosstroyekonombank (M Bank) is a mid-sized Moscow credit organisation and a former construction industry specialist. Up until June 2013 a controlling interest was held by finance and construction companies owned by former BIN group affiliates, which in March 2012 bought out a minority stake from the municipal authorities as the city disposed of non-profile assets; all shares have since changed hands and are now controlled by five private individuals, who may act as unofficial representatives of a single investor. Early last year the Bank adopted a new development strategy focused on retail and SME services, mainly for clients in Moscow and the surrounding region. Since that time the number of service locations has doubled and the Bank has reported significant growth in personal deposits.

Capital is sufficient and its quality is judged healthy. External funding now draws mainly on retail deposits following substantial growth in this area over the past year. Asset quality is rated satisfactory; client loans and the securities portfolio predominate. Profitability is low, reflecting a weak interest margin and noticeable expenditures on reserve formation. Overall risk sensitivity is moderate. Liquidity is sufficient.