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
9m agoDJChina Investigates Executive at Nissan Joint Venture
21m ago DISH NETWORK : 21st Century Fox Blacks Out Fox News and Business for DISH
26m ago WELLCARE HEALTH PLANS : Donates $5,000 to the Keeping the Faith Food Pantry in St. Louis, Mo.
1d ago SECURITAS : Sacramento switches security firms after complaints of guards who didn't show up
1d ago HONDA MOTOR : BRIEF: Stolen vehicle chase ends in Fresno crash
1d ago Teacher bargaining rights conflict persists ; Last week's bill to restrict process latest in effort that has been underway for some time
1d ago SAFEWAY : Haggen bags local Albertson's in grocery shake-up
1d ago MCDONALD : In a year of discontent, social justice issues flare near and far into protests
1d ago NETGEAR : The Oregonian, Portland, Ore., Steve Duin column
1d ago CENTURYLINK : strikes cable TV deal with Portland; service could begin in 2015
Latest news
Advertisement
Hot News 
DENDREON : Entry into a Material Definitive Agreement, Change in Directors or Principal Officers, Other Events, Financial Statements and Exhibits (form 8-K)
DIXONS CARPHONE : *exane bnp raises dixons carphone price target to 510 (450) pence - 'outperform'
BERKELEY MINERAL RESOURCES : Obsidian IR
NATURE : Warns 2014 Results To Be "Materially" Below Market View
FINISH LINE : Reports Third Quarter Fiscal Year 2015 Results
Most Read News
1d ago COMCAST : DISH, Comcast SportsNet reach deal in regional dispute
1d ago APPLE : Innovation – The Apple way
1d ago MACY : When Apple Pay Requires a Signature and When it Doesn't
1d ago FRANCESCA : announces new CEO amid faltering sales
1d ago INDUSTRY ANALYST JEFF KAGAN : Will AT&T GigaPower Beat Google Fiber
Most recommended articles
9m agoDJChina Investigates Executive at Nissan Joint Venture
1d ago U.S. says consulting UK, Australia, New Zealand on North Korea hack response
1d agoDJCruise-Ship Stocks Prepare to Set Sail
1d ago COMCAST : DISH, Comcast SportsNet reach deal in regional dispute
1d ago Last U.S. holiday shopping weekend off to solid start
Dynamic quotes  
ON
| OFF