Moody’s Demotes Uralsib’s Rating

17 July 2012 (10:56)

The rating agency Moody’s demoted the rating of Bank Uralsib by one level, down to B1. The agency is concerned over the bank’s large-scale investments in housing and commercial estate. The bank said the agency’s actions were quite strict, but promised to sell up to 50% of its real estate within six to nine months, RBC daily reports.

Last Friday, when Moody’s looked into Uralsib’s IAS documentation for 2011, the bank’s long-term national and foreign currency deposit ratings were demoted from Ba3 to B1, with Stable rating outlook.

Moody’s reports the bank incurred $130.5m worth of net loss (calculated in accordance with the IAS) last year; the share of overdue debt in its portfolio came to 9.2% of all the loans (in the 90+ category), and 7.6% of the bank’s business customers had to undergo restructuring. What is more, the agency says there are some risks related to the bank’s investment policy: last year, 70% of its Tier 1 investments were directed to real estate.

Uralsib believes Moody’s is quite strict. The bank’s Financial Director Yuri Petukhov explained their net loss mainly had to do with the need to raise the reserves fund by 7bn RUR because some of the loans issued before 2009 had been evaluated very conservatively (due to expectations of some worsening in the borrowers’ financial position by 2012).

‘At the same time, the NPL reserves went up to 117% last year. This margin of safety is sufficient given the current estimates of the economic environment,’ he added.

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