OREANDA-NEWS. RusRating has lowered the credit rating of Bank Tavrichesky from "BB+" to “BB-“ on the international scale and from "A-" to “BBB-“ on the national scale, in both cases with a negative outlook.

According to the agency, the rating cut reflects a decline in instant liquidity reserves, which under current macro-economic conditions and against the background of withdrawals by the Bank’s leading creditor implies substantially increased risks to liquidity. Increased reputation risks are also a contributing factor.

The rating itself is based on substantial experience in the Bank’s core line of business, relatively low realised risks and a good mix of shareholders whose impact on its development is rated favourably.

Constraining factors include a limited market presence at the national level, a business concentrated by individual client, modest returns on core operations and high liquidity risks.

About the Bank

Bank Tavrichesky is a mid-sized private-sector bank (one of the largest in north-west Russia) that operates mainly in St. Petersburg and the surrounding Leningrad region. Shareholders include a large group of private individuals, among them its own top managers, none of whom controls more than 20% of equity; the largest stakes are held by Chairman of the Board Oleg Zakharzhevski, Board member Ivan Kuznetsov and Management Chairman Sergei Somov. SpareBank 1 Nord-Norge, a major Norwegian bank, is a minority investor. Operations focus on the provision of integrated services to larger and mid-sized corporate clients in the fuel and energy, research and defence technology, construction and machine-building industries. The Bank is actively developing a retail presence via partnerships with corporate clients. Financial market activity is minimal.

Capital is of good quality but capital adequacy is critically low. External liabilities draw equally on corporate and retail client accounts, where balances had been trending upward; risks to stability are will be shaped by the strength of the Bank’s owners’ business ties. Asset quality is judged satisfactory, reflecting an assessment of client loans. Profitability is low and returns on core operations are modest. Overall risk sensitivity is elevated. Liquidity risk is high.

About the agency

RusRating is an independent rating agency accredited by the Ministry of Finance of the Russian Federation. The company was set up in 2001. Its primary services are the provision of credit ratings to banks, industrial firms and their debt instruments; it also provides analysis of various aspects of the Russian financial sector. For further information see www.rusrating.ru

If this material is used RusRating's press service must be cited as the source.