Fitch puts Industry & Construction Bank on positive watch

Fitch Ratings said it placed Russia-based Industry & Construction Bank's issuer default rating of BBB and short-term rating of F3 on Rating Watch positive. Its other ratings are affirmed at individual D and support 2.

The positive watch follows the receipt of shareholder approval of the bank's merger with Vneshtorgbank (BBB+/F2/C/D/2) at the recent extraordinary general meeting. Under the merger agreement, Vneshtorgbank will become the legal owner of all Industry and Construction bank's assets and obligations.

Fitch said it will resolve the positive watch on the completion of the merger. Once complete, the bank's issuer default rating and short-term rating will be equalized with those of Vneshtorgbank, based on Fitch's view of the increased propensity of Vneshtorgbank to ensure obligations of Industry and Construction Bank are met. Then the rating will be withdrawn, the agency said.

The agency noted that certain legal and other requirements must be fulfilled in order for the merger to proceed, which could delay the merger process.

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