Moody's: MDM Bank outlook negative

Moody's Investors Service said it changed the outlook on MDM Bank's Ba1 long-term local- and foreign-currency debt ratings to negative from stable. The bank's Aa1.ru national scale rating was affirmed.

The action follows MDM Bank and URSA Bank's (Ba3/D-) plan to combine their equity stakes in a bank holding company to create one of the leading private universal banks in Russia, according to the agency.

Moody's noted that the merger is likely to contribute to strengthening of MDM's franchise..

Strengths, however, may be outweighed by adverse changes in MDM's risk profile and integration challenges, which are the chief drivers of the negative outlook, the agency said.

Ratings reflect the company's established positions in servicing Russia's largest companies, its relatively low risk profile and its very good risk management practices, the agency noted.

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