Member access

4-Traders Homepage  >  News

News

Latest NewsCompaniesMarketsEconomy & ForexCommoditiesHot NewsMost Read NewsRecomm.Business LeadersVideosCalendar 

Moody's Puts Russian Banks on Notice For Downgrade

07/23/2012 | 12:52pm US/Eastern

By Alexander Kolyandr

MOSCOW--Moody's rating firm on Monday warned that banks in Russia and other former Soviet republics could face a downgrade if the euro crisis worsens.

The firm said it may lower the credit ratings of these banking systems if the probability of its adverse scenario increases.

Under that scenario, the economy would contract 5% in yearly terms over the next 10 to 12 months while the ruble would shed 30% of its value, making one of every four loans nonperforming.

Credit growth in this scenario amounts to 5% and will be mostly concentrated at state banks, the agency said, drawing parallels with the 2008-2009 financial crisis.

The adverse scenario could be triggered by an escalation of the euro area debt crisis. If it happens, Moody's said, most of the region's banking systems would report capital ratios lower than regulatory minimums.

The agency said that is less likely than its central scenario.

That scenario envisages Russia's economy growing 3.5% yearly in the next 12 to 18 months, a 10% ruble depreciation--which, the agency noted, has already happened--and a 15% growth in loan books.

Under the central scenario, Russian and CIS banks' capital positions would remain above the 8% to 10% regulatory minimum level for each country by year-end 2012.

Moody's attributes this to healthy recurring revenues and adequate loan-loss provisions. Nevertheless, Moody's doesn't expect that banks will increase their provisioning coverage in line with asset quality deterioration, and expects banks to opt for problem-loan restructuring as they did during the 2008-2009 crisis.

Write to Alexander Kolyandr alexander.kolyandr@dowjones.com

Subscribe to WSJ: http://online.wsj.com?mod=djnwires

React to this article
Latest news
Date Title
06:15p EUR/JPY TECHNICAL ANALYSIS : Euro Clears Trend Resistance
06:15p GBP/JPY TECHNICAL ANALYSIS : Next Upside Hurdle Above 182
06:15p ARUP : Promotes 31 Throughout Americas Region
06:12p SEASPAN : Reports Financial Results for the Quarter Ended March 31, 2015
06:11p CEC ENTERTAINMENT, INC. : to Announce First Quarter 2015 Financial Results and Host Conference Call
06:10p HARLEY DAVIDSON : BRIEF: Talala man dies after motorcycle wreck in Rogers County
06:10p NOBLE ENERGY : Declares Quarterly Dividend
06:10p The 3D BioDigital Human Named "Best Health Website" at 2015 Webby Awards
06:09p SPRINT : Roger Solé, CMO of TIM Brasil, to Lead Hispanic Business Unit and Innovation at Sprint
06:08p ASTRO MED : Nasdaq stocks posting largest volume decreases
Latest news
Advertisement
Hot News 
ANALYTIK JENA : Lauches New Gene Assembly Robot at SynBioBETA London 2015
BARON OIL : Says Nancy 1 Production Resumes In Colombia
SYLVANIA PLATINUM : Quarterly Report: 31 March 2015
COLLAGEN SOLUTIONS : *repeat: panmure initiates collagen solutions with 'buy' - target 18 pence
RED24 : Says Results To Beat Board Hopes, New Year Off To Good Start
Most Read News
06:01p APPLE : CEO says hard to gauge smartwatch demand
06:02p PHOSAGRO : FY 2014 IFRS Results Announcement Date
06:01p New Technology to Revolutionise Equity Research – Seed Alpha
06:01p Silicon Motion Announces Results for the Period Ended March 31, 2015
06:01p FIBRA PROLOGIS : Declares Quarterly Distribution
Most recommended articles
06:15p EUR/JPY TECHNICAL ANALYSIS : Euro Clears Trend Resistance
06:15p GBP/JPY TECHNICAL ANALYSIS : Next Upside Hurdle Above 182
06:01p APPLE : CEO says hard to gauge smartwatch demand
05:56pDJTime Warner Cable Adviser Contacts Rival Cox--Update
05:56p Greek PM leaves referendum option open, rules out elections
Dynamic quotes  
ON
| OFF