OREANDA-NEWS. IBSP has been placed on the agency's watch list because its rating or rating outlook could improve or weaken in response to new information received either from the Bank or from public-domain sources.

The rating is based on the backing of IBSP's owner, including his political connections and lobbying capacity; an established market presence in north-west Russia; and a stable corporate client base.

Constraining factors include above-average exposure to large-scale credit risks; a funding base that is only modestly diversified by individual client and to a significant extent dependent on Bazhanov's business ties; and elevated risk sensitivity.

St. Petersburg International Bank (IBSP) is a mid-sized credit organisation and a market leader in north-west Russia. Bank President Sergei Bazhanov, who vacated that post between November 2008 and August 2013 while serving as senator for Ulyanovsk region, is its sole owner. IBSP's business centres on the provision of loans and other services to major corporate clients. Most of its modest branch network is located in the Volga federal district. Market positions have been weakening since early 2012 as a result of slow growth. The Bank has well-developed ties to non-resident financial institutions and is moderately active in retail deposits.

Capital is sufficient and its quality is rated favourably. External funding is moderately well diversified by instrument type, but corporate balances predominate; risks to stability are judged moderate in the light of above-average concentration by individual creditor and the noticeable role played by the business ties of the Bank's owner. Asset quality is rated less than satisfactory given the poor quality of the loan book. Earnings performance is weak. Overall risk sensitivity is elevated, as are risks to liquidity.