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S&P upgrades ratings of VTB Bank, units

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S&P upgrades ratings of VTB Bank, units

S&P Global Ratings on March 6 raised Russia-based JSC VTB Bank's long- and short-term issuer credit ratings to BBB-/A-3 from BB+/B, and upgraded certain ratings of its units.

The agency upgraded U.K. unit VTB Capital Plc's long- and short-term issuer credit ratings to BBB-/A-3 from BB+/B and Russia-based VTB Insurance Ltd.'s issuer credit rating and financial strength rating to BBB- from BB+, with stable outlooks.

Meanwhile, VTB Bank (Kazakhstan)'s long- and short-term issuer credit ratings were upgraded to BB+/B from BB/B, while its Kazakhstan national scale rating was raised to kzAA- from kzA. The outlook on the long-term rating is stable.

The rating actions reflect the improvement in Russia's credit quality and S&P's view that VTB Bank, a government-owned entity, has a very high likelihood of receiving extraordinary state support if necessary.

The agency said it continues to assess VTB Bank's stand-alone credit profile at "bb-," citing certain pressures on the lender's credit profile, particularly the fairly high concentrations on its balance sheet and its appetite for large equity investments, such as its acquisition of a 29.1% stake in Russian retailer PJSC Magnit for roughly 138.2 billion Russian rubles, which represents about 12% of the lender's total adjusted capital as of 2017-end.

The ratings on VTB Capital and VTB Insurance are aligned with their parent, as S&P considers them as core subsidiaries of the group. VTB Bank (Kazakhstan), meanwhile, is rated one notch below VTB Bank as it is considered a highly strategic subsidiary.

As of March 6, US$1 was equivalent to 56.73 Russian rubles.

This S&P Global Market Intelligence news article may contain information about credit ratings issued by S&P Global Ratings, a separately managed division of S&P Global. Descriptions in this news article were not prepared by S&P Global Ratings. The original S&P Global Ratings documents referred to in this news brief can be found here.