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Fitch Rates Russia's OAO Swedbank 'BBB+'; Outlook Negative

April 22, 2009 | "Fitch Ratings"

Fitch Ratings-London/Moscow-22 April 2009: Fitch Ratings has today assigned Russia's OAO Swedbank (RSB) a Long-term foreign currency Issuer Default Rating (IDR) of 'BBB+' with a Negative Outlook, a Support Rating of ‘2’ and an Individual Rating of 'D/E'. A full list of ratings is provided at the end of this commentary.

The Long-term IDR reflects the support RSB is likely to receive, in case of need, from its majority shareholder, Swedbank AB (SAB - 'A'/Outlook Stable). The Individual Rating is constrained by RSB’s high lending concentrations in the real estate sector and to individual borrowers and by its low credit loss absorption capacity in a difficult operating environment, as well as by heavy reliance on parent funding. However, it also takes into account the bank’s moderate cost base, low market risk and significant level of integration into SAB’s operations.

RSB’s Long-term IDR is constrained by Russia’s Country Ceiling of ‘BBB+’ and will be downgraded in case of a similar rating action on the sovereign. The Individual Rating is under significant asset quality pressure which could lead to a negative rating action if non-performing loans become significant relative to loan impairment reserves and the capital cushion.

RSB is 85%-owned by SAB and has the same brand name, while the remaining 15% stake belongs to the European Bank for Reconstruction and Development. RSB was the 53rd-largest bank by assets in Russia at end-2008 focusing on corporate lending mainly, with nine outlets and offices located in four cities.

Company: Swedbank Russia

Full company nameOJSC Swedbank
Country of riskRussia


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