Standard & Poor's: rating actions taken on a number of Russian banks

/Standard & Poor's, Paris, March 24, 05/ - Standard & Poor's Ratings Services said today that it revised its outlooks to positive from stable on the following Russian banks: Vneshtorgbank (OJSC) (VTB or the Bank for Foreign Trade); Alfa Bank; Ural - Siberian Bank (OJSC) (URALSIB); Promsvyazbank JSCB (PSB); Bank of Khanty-Mansiysk (JSC) (BKM); JSC IMPEXBANK (Impex); and Web-invest Bank (Web-invest). The outlook on Gazprombank (Joint-Stock Bank of Gas Industry) was revised to developing from stable. At the same time, Standard & Poor's raised its Russia national scale rating on BKM to 'ruBBB' from 'ruBBB-'. Standard & Poor's also affirmed its long- and short-term counterparty credit ratings at 'BB+/B' on VTB, 'B+/B' on Gazprombank, 'B/C' on Alfa Bank, 'B-/C' on URALSIB, 'B-/C' on PSB, 'B-/C' on BKM, 'CCC+/C' on Impex, and 'CCC/C' on Web-invest. The Russia national scale ratings on Alfa Bank and Gazprombank were affirmed at 'ruA+'. "The outlook change on VTB reflects better potential for stronger backing from Russia to help support the bank's ambitious expansion strategy," said Standard & Poor's credit analyst Ekaterina Trofimova. The ratings on VTB factor in the still-risky banking and economic environment in The Russian Federation (foreign currency BBB-/Stable/A-3; local currency BBB/Stable/A-3), the challenges of adopting an aggressive expansion and acquisition strategy, and the bank's high lending concentrations. These negative factors are offset by the bank's state ownership, important role in financing foreign-trade-related corporate and state-owned enterprises in Russia, and strong local franchise, underpinning good growth prospects amid an improving macroeconomic environment. "The outlook revision on Gazprombank reflects the uncertain impact on the bank of a potential rating action on parent OAO Gazprom upon resolution of its CreditWatch status," said Standard & Poor's credit analyst Irina Penkina. The ratings on the bank factor in its strategic importance to OAO Gazprom (Gazprom; BB-/Watch Dev/-), the world's largest gas producer, and Gazprom- related companies. The ratings are constrained by the bank's high exposure to the Gazprom group, weak earnings structure, and the risks associated with operating in the precarious environment prevailing in Russia. The ratings are nevertheless supported by Gazprombank's adequate capitalization and good liquidity. The outlook change on Alfa Bank reflects the bank's bright prospects to expand its franchise and increase business diversification, as well as the continued and demonstrated support of shareholders. The ratings on Alfa Bank continue to be constrained by the bank's considerable single-party concentrations-although these have decreased in the past two years--and hefty cost base, as well as by the still-high level of operating risk for all banks in Russia. The outlook change on URALSIB reflects the bank's improving prospects for further business and customer diversification, and growth in core revenues. The ratings reflect URALSIB's limited core profitability, challenges stemming from the ongoing merger with its sister banks, and relatively high level of concentration in loans and deposits when compared internationally. These negative factors are partly mitigated by URALSIB's solid business franchise and commercial profile, which improve its chances of successful expansion. The ratings are also supported by URALSIB's dominant market position in the Republic of Bashkortostan (BB-/Stable/--) and close relationship with the regional government. The outlook change on PSB reflects the improving financial and commercial profile of the bank, including a more solid revenue base and adequate capitalization. The ratings are constrained by the bank's funding weaknesses, a concentrated loan portfolio, and the still-hazardous operating environment in Russia. The outlook revision and Russia national scale rating upgrade on BKM reflect the bank's improving revenue structure, sound liquidity, better loan-book diversification, as well as the bank's good growth potential in its home region. The ratings are constrained by BKM's volatile funding base, low capitalization, and weak asset quality by international standards. The bank's close ties to its principal owner, the government of the Khanty-Mansiysk Autonomous Okrug (BB/Stable/--), located in Western Siberia, nevertheless support the ratings. The outlook change on Impex reflects improving asset diversification, in particular declining lending concentration with related parties; a growing franchise in commercial banking; good funding diversification; and a focused development strategy. The ratings nevertheless remain constrained by modest capitalization, low--albeit improving--core profitability, and still high lending concentrations. In addition, current shareholders have an inconsistent record of providing financial support when required. The outlook revision on Web-invest takes into consideration the bank's improved franchise diversification, steady growth, and stable management. The ratings reflect Web-invest's limited size and track record, highly concentrated assets, fairly tight capitalization, and dependence on Russian equities trading volumes. These negative factors are partially mitigated by the bank's improving franchise, and fairly transparent ownership structure. For further information on these outlook revisions, see associated research updates published today on RatingsDirect, Standard & Poor's Web-based credit analysis system, under the names of the individual banks concerned. For Standard & Poor's most recent overview of the Russian banking industry, please see the report "Russia Must Persevere With Banking Reform Despite Shaky Start," published on RatingsDirect, Standard & Poor's Web-based credit analysis system, on Sept. 7, 2004. Ekaterina Trofimova, Paris (33) 1-4420-6786; ekaterina_trofimova@standardandpoors.com Irina Penkina, Moscow (7) 095-783-4070; irina_penkina@standardandpoors.com John Gibling, London (44) 20-7176-7209; john_gibling@standardandpoors.com Eugene Tarzimanov, Moscow (7) 095-783-4071; eugene_tarzimanov@standardandpoors.com FIG_Europe@standardandpoors.com Ratings information is available to subscribers of RatingsDirect, Standard & Poor's Web-based credit analysis system, at www.ratingsdirect.com. It can also be found on Standard & Poor's public Web site at www.standardandpoors.com; under Credit Ratings in the left navigation bar, select Find Ratings, then Credit Ratings Search. Alternatively, call one of the following Standard & Poor's numbers: London Ratings Desk (44) 20-7176-7400; London Press Office Hotline (44) 20-7176-3605; Paris (33) 1-4420-6708; Frankfurt (49) 69-33-999-225; Stockholm (46) 8-440-5916; or Moscow (7) 095-783-4017. Members of the media may also contact the European Press Office via e-mail on: media_europe@standardandpoors.com. [2005-03-25]