Fitch puts Probusinessbank on watch

Fitch Ratings said it placed the ratings of Probusinessbank on Rating Watch negative, including its B- long-term foreign- and local-currency issuer default ratings, B-/RR4 senior unsecured debt rating, B short-term issuer default rating, BB-(rus) national long-term rating, D/E individual rating, 5 support rating and "No Floor" support rating floor.

The Rating Watch replaces the previous negative outlook and indicates the heightened probability of a downgrade in the near term following a full review of the bank due to asset quality and capital concerns, the agency said.

Asset quality at both Probusinessbank and its subsidiary banks continues to deteriorate, Fitch said, and the banks' capital offers a limited ability to absorb any future losses. Non-performing loans stood at 8.6% at Probusinessbank at the end of May and 11.9% on a consolidated basis.

The bank has applied for a RUB 665 million subordinated loan from Vnesheconombank, but the agency believes this will not by itself be sufficient to strengthen the bank's capital position given the already high proportion of tier 2 in the bank's capital and the negative trend in asset quality.

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