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January 3, 2008 |
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TVER BANK: Moody's Assigns Caa1/NP/E/Ba1.ru Global Scale Ratings Moody's Investors Service assigned these global scale ratings to Joint-Stock Business Bank TVER JSC: -- bank financial strength rating of E; and -- long-term and short-term local and foreign currency deposit ratings of Caa1/Not Prime. Concurrently, Moody's Interfax Rating Agency assigned a long- term national scale rating of Ba1.ru to Bank TVER. Moscow-based Moody's Interfax is majority-owned by Moody's, a leading global rating agency. The outlook on the global scale ratings is stable, while the national scale rating carries no specific outlook. According to Moody's and Moody's Interfax, the Caa1/Not Prime/E global scale ratings reflect global default and loss expectation, while the Ba1.ru national scale rating reflects the standing of Bank TVER's credit quality relative to that of its domestic peers. According to Moody's, Bank TVER's ratings reflect the bank's sound economic capitalization and its currently good asset quality. However, the ratings are constrained by the bank's small market franchise, very high concentration of its funding base, relatively decreasing level of liquidity due to the growing share of the loan portfolio in the structure of its total assets and a high market risk appetite resulting in a potentially highly volatile nature of its operating income. Moody's notes that Bank TVER is unlikely to receive support from the Russian government in case of distress. The scope and timeliness of the support from the bank's shareholders also remains uncertain. Therefore, bank TVER's deposit ratings are based solely on its Baseline Credit Assessment of Caa1/Not Prime. Hence, the Caa1 long-term foreign currency deposit rating assigned to the bank does not incorporate any probability of external support. Moody's notes that an upgrade of Bank TVER's deposit ratings might be possible in the event of significant growth of its market franchise together with decreasing concentration of the funding base, improvement of profitability and decreasing market risk appetite while maintaining good assets quality. In Moody's opinion, there is a remote likelihood of a downgrade of Bank TVER's current ratings. However, any deterioration of its assets resulting from realization of market or credit risks, and decreasing liquidity together with a decrease of economic capitalization could potentially have negative rating implications. Domiciled in Tver, the major business activity of the bank relates to the companies of the Group Guta. At the same time, Bank TVER is one of the largest privately owned local banks in the Tver region by total assets and shareholders' equity, with branches in Moscow, St. Petersburg, Tula, Voronezh, St. Petersburg, Chelyabinsk, Tambov and Nizhny Novgorod. At year end 2006, Bank TVER reported: total consolidated assets of US$159 million (US$38 million at year end 2005); shareholders' equity of US$52.5 million (US$3.3 million at year end 2005); and net profit of US$1.5 million (US$0.6 million in 2005). |
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