Fitch lowers MDM Bank

Fitch Ratings said it downgraded MDM Bank's long-term issuer default rating to BB- from BB, viability rating to BB- from BB, national long-term rating to A+(rus) from AA-(rus), senior unsecured debt to BB- from BB and senior unsecured debt to A+(rus) from AA-(rus).

The agency also said it affirmed the bank's short-term issuer default rating at B.

The outlook is negative.

The downgrade reflects the on-going asset quality problems due to poor recovery management and as a result a massive increase in reserving in 2011, weakened capitalization and profitability and continued franchise erosion, Fitch said.

The planned capital support from the main shareholder and implementation of a revised strategy by the new senior management team could help to stabilize the bank's asset quality metrics and solvency, the agency said.

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