/Standard & Poor's, Paris, December 7, 04/ - "Banking systems of CIS countries' levels of risks - one of the highest in the world, CIS banks are vulnerable to external shocks and possible changes in government policy. That fact is confirmed by pressure, which today experiencing Ukrainian banks under influence of political instability, and turbulence of Russian banking sector in summer 2004", report, published today by Standard & Poor's says.

Report, titled as Banking systems of CIS countries: different prospects, but general risks, represents the first experience of wide regional review, whose purpose is to highlight prospects of banking systems of CIS countries, who are exposed to this system, and thus, to fill definite gap in information analytical picture, essential for market participants and investors.

"Though majority out of 12 CIS countries reached considerable progress in the field of market transformation of economy, there is much to be done, specially in reformation of banking sectors", - considers author of the report, credit analyst of Standard & Poor's Yekaterina Trofimova. All banks of region should decide numerous and complicated problems, particularly to increase level of financial mediation, to expand spectrum of products, diversify sources of incomes, raise efficiency, and also introduce new, more perfect instruments for raising of quality of operational activity and risk management.

"Important factor, determining long term prospects for development and prosperity of CIS countries, as well as their banks is ability and readiness of government authorities to support and precipitate economy, industry and legislative base reformation", - stressed Ms. Trofimova. This large region, square more than five times larger than territory of European unit countries, however ceding twice to population, in view of lack of financial mediation development and increasing demand for banking services has big potential for growth of banking system, in many respects still unclaimed. Big opportunities in this respect possess banking systems of Kazakhstan, Russia and Ukraine - leaders of the region.

"Though banking systems of CIS countries more differ in directions of development and efficiency indexes, they are united by a number of general risks, - Ms. Trofimova considers. - Here it is told about high economical and field risks, strongly dependent upon economical cycles, low level of welfare and considerable inequality of population incomes, lack of normative- legislative system development, heterogeneity of accounting standards and insufficient trust to banking system".

Reflection of weakness of CIS banking system is that fact, majority of Standard & Poor's ratings, assigned to banks of these countries, are in "speculative" category of rating scale, in its lowest and medium part.

Still CIS banks developed primarily "inside" of their national markets, without any considerable foreign investments. However they start more and more to interest neighboring markets - under influence of necessary transboundary services to large corporate clients, improvement of macroeconomical conditions, and also expansion of interregional collaboration and trade. International banks now only trying the region, none of them singles out CIS as aim market and does not have clear strategies of its developing.

To get more detailed information: Yekaterina Trofimova, Paris, 33 (1) 44-20-67-86, ekaterina_trofimova@standardandpoors.com John Gibling, London, 44 (207) 176-72-09, john_gibling@standardandpoors.com Irina Penkina, Moscow, 7 (095) 783-4070, irina_penkina@standardnandpoors.com

For connection with people: Claude Chaubet-Bride, London, 44 (207) 176-36-03;
claude_chaubet@standardandpoors.com Yekaterina Novikova, Moscow,7 (095) 783-40-17;
ekaterina_novikova@standardandpoors.com

You may get acquainted with the report in RatingsDirect - credit-analytical system of Standard & Poor's (www.ratingsdirect.com), and also in public site of Standard & Poor's www.standardandpoors.com; in section Credit Ratings in left navigation panel to choose Find Ratings, then Credit Ratings Search. You may also ask your questions in one of Standard & Poor's rating information departments: Moscow, 7 (095) 783-40-17; London, 44 (207) 176- 74-00; Paris, 33 (1) 44-20-67-08; Frankfurt, 49 (69) 33-99-92-25; Stockholm, 46 (8) 440-59-16. Mass media representatives may connect with press- service on "hot line": 44 (207) 176-36-05 or through Internet: media_europe@standardandpoors.com.

Russian version of report vide in Russian site of Standard & Poor's www.standardandpoors.ru.

[2004-12-07]