RS Brief news Standard & Poor's sees no serious threat to Russian banks

Standard & Poor's sees no serious threat to Russian banks

September 2012

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sberbank

According to a study carried out by Standard & Poor's (S&P), the banking systems of Russia and the CIS will be able to avoid the worst effects of the financial crisis in the Eurozone due to the limited nature of their relations with European banks.

The economic difficulties faced by some members of the Eurozone and their banking systems, as well as the impending introduction of the Basel III package of banking regulations, are likely to lead to some Western European banks having to cut back on foreign investment, say the authors of the study. However, the dependence of Russian and CIS banks on direct foreign investment from Eurozone banks is insignificant, so the decline of the latter is not a great risk to the banking systems of Russia and the CIS.

Moreover, S&P experts point out that the main source of risk to the Russian and CIS banking systems is the deterioration of the overall macroeconomic picture. Banks in Russia and the CIS may suffer if the slowdown of the global economy puts extended pressure on oil and raw material prices, the rates of local currencies and stock markets. In particular, the rouble value and the situation on the MICEX may be particularly vulnerable, as they tend to be volatile in times of crisis. Experts say that there will inevitably be a slowdown in economic growth in Russia and the CIS. However, according to the report, the impact will not be strong enough to pose a serious risk to the economy, particularly the banking sector in those countries. RS

We remind you that S&P estimates the short-term sovereign rating of the Russian Federation for foreign currency obligations at A-2 level, and the country's long-term credit rating in foreign currency at BBB. The long- and short-term ratings for local currency obligations are estimated at BBB+ and A-2, respectively. All ratings have a stable outlook.