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Moody's downgrades Vozrozhdenie Bank on links to failed sister bank

Moody's on Dec. 21 downgraded Vozrozhdenie Bank's long-term foreign- and local-currency bank deposit ratings to B2 from B1, its baseline and adjusted baseline credit assessments to "b2" from "b1" and its long-term counterparty risk assessment to B1(cr) from Ba3(cr).

The agency maintained the ratings on review for downgrade, where they have been since Nov. 1.

In addition, Moody's affirmed the Russian lender's Not Prime short-term bank deposit rating and Not Prime(cr) short-term counterparty risk assessment.

The downgrade, along with the maintaining the review for downgrade, follows the recent failure of Vozrozhdenie's sister bank, PAO Promsvyazbank, which had been placed under the temporary administration of the Central Bank of Russia. Promsvyazbank's failure can lead to additional credit losses for Vozrozhdenie in case of affiliated loans writeoffs, Moody's noted.

The rating actions reflect Vozrozhdenie's connections to Promsvyazbank and its shareholders, which present heightened risks of related-party exposure and damage to Vozrozhdenie's reputation, the agency added.

Moody's earlier downgraded Promsvyazbank's baseline and adjusted baseline credit assessments to "ca" from "caa1," among other ratings actions.