Mon Oct 15, 2012 6:47am EDT
Oct 15 - Group risks are becoming an increasingly key factor in rating Russian consumer finance banks, says Fitch Ratings. They are likely to be as important as stand-alone credit metrics in determining rating actions in the near-to-medium term.
Our main concern is the impact of non-banking investments by owners of consumer banks on group or shareholder leverage. Home Credit and Finance Bank (HCFB), Russian Standard Bank (RSB) and CB Renaissance Capital (CBRC) are potentially vulnerable as they are the most profitable and cash generative entities in their groups, and have controlling shareholders who have been quite opportunistic in their investment strategies, both within Russia and abroad.
We believe there is a risk that capital and/or liquidity could be withdrawn from these banks in case of further investments or refinancing difficulties at group or shareholder levels.
Corporate and universal banks in Russia and the Commonwealth of Independent States have long faced direct risks from related parties in the form of lending and other asset exposures - these risks are an important factor in their ratings. In contrast, the balance sheets of Russian consumer finance banks have largely been kept clean of group risks. However group risks are an important contingent exposure for some consumer banks, making them also exposed to their shareholders' fortunes.
We affirmed the IDR of HCFB at 'BB-' with a Stable Outlook on 12 October. We also said that the bank's stand-alone metrics warranted a rating of 'BB', one notch higher. However, the rating was affirmed at the lower level because of potential risks from the investments and leverage of the broader PPF group, in particular from one large funding facility.
We believe RSB's stand-alone metrics also warrant a rating one notch higher than the current 'B+' level. However, the rating is constrained as a result of the ongoing acquisition by the bank's controlling shareholder, Roustam Tariko, of Central European Distribution Corporation (CEDC), a large alcoholic beverage production and distribution company. This has already resulted in sizable capital distributions from RSB, in the form of both dividend payments and purchases of the equity of RSB's parent company. We believe that RSB may be used to further fund the acquisition, as well as to refinance some of CEDC's debt.
CBRC's 'B' rating is in line with our current assessment of the bank's stand-alone strength. However, risks within the broader Renaissance Group represent a significant contingent exposure, and an increase in these could result in downward pressure on CBRC's ratings. We believe there is a risk that CBRC may be used to support other group entities, considering the weak performance of sister investment banking group Renaissance Financial Holdings Limited ('B'/Negative) and significant leverage at holding company levels.
Ratings of other banks active in the Russian consumer finance sector, namely OJSC OTP Bank ('BB'/Negative/'b+'), Credit Europe Bank Limited ('BB-'/Stable/'bb-') and CJSC Bank VTB24 ('BBB'/Stable/'bb'), are also to a large degree dependent on developments in broader group profiles. However, the controlling shareholders of each of these entities are parent banks - OTP Bank (Support rating '3'), Credit Europe Bank N.V. ('BB'/Stable) and JSC Bank VTB ('BBB'/Stable/'bb-'), respectively - and subsidiary ratings benefit from potential support from parent institutions or ultimately from the Russian authorities, in the case of VTB24.
Tinkoff Credit Systems ('B'/Positive) is the only Russian consumer finance bank currently rated by Fitch where group or shareholder risks play a relatively minor role in our assessment. At the same time, we view as moderately negative the fact that the bank produces consolidated IFRS accounts only at the level of its Cyprus-based holding company, Egidaco.
- Link this
- Share this
- Digg this
- Reprints
Anda sedang membaca artikel tentang
TEXT-Fitch: Group risks to fore for Russian consumer finance banks
Dengan url
http://sarapannasiudak.blogspot.com/2012/10/text-fitch-group-risks-to-fore-for.html
Anda boleh menyebar luaskannya atau mengcopy paste-nya
TEXT-Fitch: Group risks to fore for Russian consumer finance banks
namun jangan lupa untuk meletakkan link
TEXT-Fitch: Group risks to fore for Russian consumer finance banks
sebagai sumbernya
0 komentar:
Posting Komentar