RusRating lowers OAO Uralsib credit rating and changes outlook to uncertain
OREANDA-NEWS. RusRating has lowered the credit rating of OAO Uralsib from "BB+" to “BB-“ on the international scale and from "A" to “BBB-“ on the national scale, in both cases with an uncertain outlook.
According to the agency, the rating cut reflects an ongoing downward trend in business activity, minimal capital adequacy, a lack of resources to cover growing credit risks, and current losses.
The change in outlook from “stable” to “uncertain” reflects the Bank’s need for financial support and uncertain prospects for locating a creditworthy investor.
The rating is based on the Bank's systemically-important role in Bashkortostan; a stable client base; and an established presence in virtually all segments of the banking market.
Constraining factors include heavy sensitivity to variable securities market conditions and volatile earnings; above-average credit and operating risks; a decline in the support available from the Bank's principal beneficiary owner; a low capital base; and low profitability.
About the Bank
Uralsib is a universal financial institution of national significance – one of Russia’s top thirty banks by assets – and has historically had a systemically-important role in the Republic of Bashkortostan. The primary asset of the Uralsib financial group controlled by Nikolai Tsvetkov, it remains a major player in several areas, including corporate, retail and investment banking, with an extensive service network and established ties to both domestic and western counterparties. Its market share has fallen since the start of 2012, when Tsvetkov shifted his attention to projects outside banking, and his capacity to provide support has declined, as has managerial effectiveness. Uralsib’s own resources are sufficient to maintain stability and a high level of creditworthiness, but to sustain growth and competitiveness it will need to update its strategy, modernise its management systems, take in fresh capital and diversify its ownership structure.
Capital is of satisfactory quality and provides minimally adequate scope to cover growing risks. External funding is diversified by type, but a downward trend in corporate client balances and borrowing from non-resident banks continues, while growth in retail deposits has slowed. Asset quality is rated satisfactory; the percentage of revenue-generating assets has declined. Profitability is weak and financial results are noticeably affected by variable factors. Current liquidity is sufficient but the term structure of the balance sheet implies elevated risks. Overall risk sensitivity is likewise elevated.