Moody's on Dec. 16 downgraded JSC Russian Bank for Small & Medium Enterprises Support's long-term local-currency debt and deposit ratings to Ba2 from Ba1.

The agency also downgraded the bank's baseline credit assessment and adjusted baseline credit assessment to "b2" from "b1." At the same time. Moody's affirmed SME Bank's Not Prime short-term foreign-currency deposit rating, Ba2 long-term foreign-currency deposit rating and Ba1(cr)/Not Prime(cr) counterparty risk assessments.

The outlook on all the long-term global scale ratings remains negative.

The downgrade of the bank's baseline credit assessment is a result of impairment of its assets and an increased likelihood of the bank's capital erosion, following the recently increased failures of small and mid-sized Russian banks, Moody's said. The downgrade of the bank's local-currency long-term ratings reflect that of the baseline credit assessment.

The negative outlook is driven by the sovereign rating outlook and the sensitivity of SME Bank's solvency metrics to the continuing failures of the sector.