30/08/2017 10:06
Moody’s Investors’ Service upgraded RCB Bank’s long term local- and foreign-currency deposit ratings to B1 from B3 and its baseline credit assessment to b2 from b3.
According to the agency, the rating action reflects RCB Bank`s strong solvency as well as Moody`s expectation that the bank will continue to grow its standalone business and strengthen its franchise. It also reflects Moody`s expectation that RCB Bank will maintain its strong links with Bank VTB, one of its main shareholders with 46.3% stake, which has led the agency to incorporate one notch of rating uplift in RCB Bank`s deposit ratings to capture a moderate probability of support from Bank VTB in case of need.
The outlook on the long-term deposit ratings was changed to stable reflecting Moody`s expectation that the bank`s financial fundamentals will remain broadly unchanged over the next 12-18 months.
According to rating rationale the upgrade of the BCA to b2 from b3 reflects RCB Bank`s strong solvency, reflected in high capital and low levels of problem loans as well as Moody`s expectation that the bank will continue to grow its standalone business and strengthen its franchise.
Although currently most of RCB Bank business stems from its links with Bank VTB, with more than 60% of RCB Bank`s loans guaranteed by Bank VTB, RCB Bank has been strengthening its stand-alone franchise over the last few years. Moody`s expects the bank to gradually grow further its standalone operations both with foreign customers based in Cyprus and to a lesser extent with Cypriot customers.
According to Moody’s, RCB Bank`s ratings could be upgraded following a material strengthening in its standalone franchise leading to reduced concentration and lower reliance on wholesale funding, while maintaining its current strong capital buffers and low levels of problem loans. An improvement in the credit risk profile of Bank VTB and/or an increased likelihood of support in Moody`s view, could also lead to an upgrade of RCB Bank`s ratings.
RCB Bank`s ratings could be downgraded following a sharp rise in problem loans which would erode its profitability and weaken its capital buffers, or a material decline in capital due to high growth. A reduced capacity or willingness by Bank VTB to support RCB Bank in case of need could also result in a downgrade
In a written statement, the CEO of RCB Bank Kirill Zimarin said that Moody’s rating reaffirms the confidence in the Bank from both the Bank’s clients and the management.
“With strong capital and liquidity position, confirmed by this improved rating, RCB will continue implementation of its strategy focused on growth in the Cypriot and other European markets”, Zimarin said.
According to the agency, the rating action reflects RCB Bank`s strong solvency as well as Moody`s expectation that the bank will continue to grow its standalone business and strengthen its franchise. It also reflects Moody`s expectation that RCB Bank will maintain its strong links with Bank VTB, one of its main shareholders with 46.3% stake, which has led the agency to incorporate one notch of rating uplift in RCB Bank`s deposit ratings to capture a moderate probability of support from Bank VTB in case of need.
The outlook on the long-term deposit ratings was changed to stable reflecting Moody`s expectation that the bank`s financial fundamentals will remain broadly unchanged over the next 12-18 months.
According to rating rationale the upgrade of the BCA to b2 from b3 reflects RCB Bank`s strong solvency, reflected in high capital and low levels of problem loans as well as Moody`s expectation that the bank will continue to grow its standalone business and strengthen its franchise.
Although currently most of RCB Bank business stems from its links with Bank VTB, with more than 60% of RCB Bank`s loans guaranteed by Bank VTB, RCB Bank has been strengthening its stand-alone franchise over the last few years. Moody`s expects the bank to gradually grow further its standalone operations both with foreign customers based in Cyprus and to a lesser extent with Cypriot customers.
According to Moody’s, RCB Bank`s ratings could be upgraded following a material strengthening in its standalone franchise leading to reduced concentration and lower reliance on wholesale funding, while maintaining its current strong capital buffers and low levels of problem loans. An improvement in the credit risk profile of Bank VTB and/or an increased likelihood of support in Moody`s view, could also lead to an upgrade of RCB Bank`s ratings.
RCB Bank`s ratings could be downgraded following a sharp rise in problem loans which would erode its profitability and weaken its capital buffers, or a material decline in capital due to high growth. A reduced capacity or willingness by Bank VTB to support RCB Bank in case of need could also result in a downgrade
In a written statement, the CEO of RCB Bank Kirill Zimarin said that Moody’s rating reaffirms the confidence in the Bank from both the Bank’s clients and the management.
“With strong capital and liquidity position, confirmed by this improved rating, RCB will continue implementation of its strategy focused on growth in the Cypriot and other European markets”, Zimarin said.