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Moody's takes ratings actions on 2 Russian lenders

Moody's on Oct. 4 took ratings actions on Russian lenders PAO Promsvyazbank and Vozrozhdenie Bank, which are planning to merge.

The agency downgraded PAO Promsvyazbank's baseline and adjusted baseline credit assessments to "b2" from "b1" and affirmed its long- and short-term bank deposit ratings at Ba3/NP, with a negative outlook on the long-term rating. The bank's Ba2(cr)/NP(cr) long- and short-term counterparty risk assessments and its Ba3 senior unsecured regular bond/debenture rating were also affirmed, with the outlook on the latter remaining negative.

The downgrade reflects Moody's view that the bank's solvency metrics will remain weak during the next 12 to 18 months, as reflected by the lender's large stock of impaired assets, modest profitability and capital position, which continues to face pressures from low provisioning level.

Separately, Moody's placed on review for upgrade Vozrozhdenie Bank's B1 long-term local- and foreign-currency bank deposit ratings and its Ba3(cr) long-term counterparty risk assessments. The outlook on the bank deposit rating was previously stable.

The agency expects that Vozrozhdenie Bank, its depositors and senior creditors would benefit from its potential merger with Promsvyazbank.