OREANDA-NEWS. RusRating has lowered the credit rating of OAO VUZ-Bank from "BB" to “CCC” on the international scale and from "BBB+" to “B-“ on the national scale, in both cases with a stable outlook.

According to the agency, the rating cut reflects increased regulatory and reputation risks affecting the parent ProbusinessBank and a substantial rise in credit risks following a large volume of asset-side transactions with the parent bank.

The rating is based on moderately well-developed market positions at the regional level and moderate sensitivity to existing credit risk.

Constraining factors include high credit risks; high regulatory and reputation risks; a funding base dependent on retail deposits, which are typically more sensitive to any market-wide panics; a shrinking business and declining market presence.

About the Bank

VUZ-Bank is a private-sector regional bank set up in 1991 and one of Russia's top three hundred by assets. It is a member of the LIFE group, which includes six subsidiary banks plus Life Factoring and the real estate developer Probusiness-Development; the group has loan offices and other service locations in several regions of the country and its hub, ProbusinessBank, is one of Russia's top one hundred credit organisations. VUZ-Bank itself focuses on loans and other services for corporate and retail clients, mainly in Sverdlovsk region, and its market positions at the regional level are moderately well-developed.

Capital is sufficient and of good quality. External funding has been stable in the past and draws mainly on retail balances. Asset quality is judged satisfactory, based primarily on analysis of client loans. Profitability is modest: pressure from the cost of loan provisioning has offset a strong interest margin. Overall risk sensitivity is moderate but trending upward. Liquidity is sufficient.