RAEX (Expert RA) has cut its creditworthiness rating on Bank Solidarnost from В++ to B. According to the agency's rating scale, the rating assigned to the bank means "low creditworthiness".
RAEX set the developing outlook (which means the equal likelihood both of the rating being maintained at the current level and being revised in the medium term), and put the rating on watch. The rating action came after growth of regulatory and reputation risks faced by Probusinessbank, which is in charge of rehabilitating Bank Solidarnost, RAEX said in a press release.
"Bank Solidarnost is characterized by high lending of the rehabilitating bank, so Probusinessbanks's worsening financial standing will result in a sharp decline in capital and impair Bank Solidarnost's liquidity indicators," the agency noted. Moreover, the agency took into account the deteriorating quality of the bank's credit portfolio (NPLs vs. the aggregate credit portfolio increased from 13.4% as of July 1, 2014 to 33.5% as of July 1, 2015). The developing rating outlook is determined by uncertainty about the Bank of Russia's future actions with regard to Probusinessbank, the agency's analysts noted.