RusRating changes outlook on FundserviceBank credit rating
According to the agency, the change in outlook reflects uncertainty about the Bank’s future prospects following the appointment of a temporary administration on 25 February 2015.
The rating itself is unchanged at “BB+” on the international scale and “A-“ on the national scale and is based on the absence of any apparent loss of creditworthiness; stable operations; healthy returns on core operations; and moderate assessed sensitivity to financial risks under current macro-economic conditions. Furthermore, on 6 February 2015 the Central Bank of Russia added FundserviceBank to the list of credit organisations qualified to handle pension savings and military housing funds. Against the background of a weakening macro-economic environment this, in RusRating’s view, makes the Bank more attractive to potential investors and reinforces the level of trust likely to be shown by clients and counterparties.
At the same time, the Bank’s business has, to a large extent, been built around a client base with professional ties to its owner. Any weakening of these ties could increase the risk of a funding outflow and lead to a deterioration in both loan book quality and overall financial performance. If these risks are realized the Bank’s ratings will be revised downwards.
FundserviceBank is a private-sector Moscow bank that ranks among Russia’s top one hundred by assets. It is a member of the STK Soyuz group, an established player in advanced technology controlled by Bank President Alexander Volovnik; the construction company OOO Bastion holds a stake of just under 10%. FundserviceBank’s business centres on the provision of integrated services to firms in high-tech and research-intensive sectors, particularly the aerospace and defence industries. A strong client base in various regions of the country draws mainly on these strategic industries and in part reflects partnerships with the responsible government bodies. For the most part retail development has focused on payroll projects and funding drawn from the employees of corporate clients. Securities market activity is minimal.
Capital is minimally adequate and of good quality. External funding draws to a large extent on budgetary resources and state-sector bodies in strategic industries; risks to stability are defined by the state of Volovnik’s official connections. Balance sheet measures of asset quality are satisfactory; corporate loans predominate, exposure to large-scale credit risks is elevated and a noticeable volume of financing has been extended to affiliated parties, but realised credit risks are consistently modest and exposure to the securities market is low. Earnings performance is weak due to pressure from negative re-evaluations against the background of a healthy net interest margin. Overall risk sensitivity is moderate. Liquidity is sufficient.