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Fitch revises outlooks on long-term ratings of Sovcombank, RosEvroBank

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Fitch revises outlooks on long-term ratings of Sovcombank, RosEvroBank

Fitch Ratings on March 21 revised to positive from stable the outlooks on the long-term foreign- and local-currency issuer default ratings of PJSC Sovcombank and JSCB RosEvroBank (JSC) and affirmed the ratings at BB-.

The agency placed the 5 support rating of RosEvroBank on rating watch positive, and affirmed the 5 support rating and BB- senior unsecured debt rating of Sovcombank.

At the same time, the agency affirmed both banks' B short-term foreign-currency issuer default ratings, "bb-" viability ratings and No Floor support rating floors.

The ratings actions came after the two Russian banks announced that their shareholders have decided to merge them, with Sovcombank, which already owns a 45% stake in RosEvroBank, acquiring a further shareholding of least 35% from REG Holding, which represents RosEvroBank shareholders.

The agency said the positive outlook on Sovcombank's long-term ratings reflect its view is that "the medium- to long-term benefits from the acquisition and subsequent merger should significantly outweigh the moderate short-term negative of a temporary reduction in SCB's regulatory capital ratios." For RosEvroBank, the outlook revision reflects the similar action on Sovcombank.