by Siranush Manucharyan
Moody's Investors Service has assigned the following ratings to VTB Bank (Armenia): local currency deposit rating of Ba1, foreign currency deposit rating of Ba3, bank financial strength of D- (equivalent to a ba3 baseline credit assessment [BCA]), and Not- Prime short-term deposit ratings.
According to Moody's Investors Service, the bank's long-term global local currency deposit rating carries a negative outlook, the long-term global foreign currency deposit rating and the BFSR carry a stable outlook.
The bank's Ba1 long-term local currency deposit rating incorporates the rating agency's assessment of a high probability of parental support from Russia-based Bank VTB JSC (deposits Baa2 negative; BFSR D- negative/BCA ba3). As a result, the bank's deposit ratings receive two notches of uplift from its ba3 BCA.
The bank's standalone D- BFSR is supported by the bank's (1) close integration into the VTB group, which facilitates the bank's business origination and supports its funding and liquidity profile; (2) strong franchise in the corporate and retail segments in Armenia; and (3) good financial fundamentals namely capital adequacy, profitability and efficiency. Factors constraining the bank's standalone ratings include its aggressive lending strategy in 2010-13, which could result in heavy credit losses upon seasoning, as well as high credit risk concentrations.
The press service of VTB Bank (Armenia) quotes Deputy CEO of VTB Bank Mikhail Yakunin as saying that that being universal and widely represented in Armenia, VTB Bank (Armenia) is quite active in the key sectors of the country's economy.
"So, I am sure that Moody's ratings will foster our ties with old and new partners in Armenia and abroad," Yakunin said.
According to VTB Bank (Armenia)'s Yuri Gusev, Moody's ratings are important for the bank. "I would like to note that our ratings are limited by Armenia's country ceiling. So, if the latter is raised, our ratings may be reviewed," Gusev said.
Earlier Moody's assigned 'Baa3' ceiling for Armenia's local currency bond and deposits and lowered the country's foreign currency bond ceiling from 'Baa3' to 'Ba1'. The agency also changed Armenia's short- term foreign-currency bond ceiling to Not-Prime (NP) from Prime-3 (P- 3).
Later Fitch Ratings has been affirmed Armenia's country ceiling at 'BB' and the Short-term foreign currency IDR at 'B'. The Long-term foreign and local currency Issuer Default Ratings (IDRs) were affirmed at 'BB- '. The Outlooks are Stable. The issue ratings on Armenia's senior unsecured foreign and local currency bonds were also affirmed at 'BB-'.
VTB Bank (Armenia) joined VTB Group in Apr 2004. It sole owner is VTB Bank.