Moody's lowers Probusinessbank

Moody's Investors Service said it downgraded Probusinessbank's long-term local- and foreign-currency deposit ratings to B3 from B2, provisional senior unsecured local- and foreign-currency debt ratings to provisional B3 from provisional B2, and provisional subordinated local- and foreign-currency debt ratings to provisional Caa1 from provisional B3.

Concurrently, the agency affirmed Probusinessbank's standalone E+ bank financial strength rating, which is now equivalent to a baseline credit assessment of b3 (formerly b2), the bank's Not Prime short-term local- and foreign-currency deposit ratings, and provisional short-term local-and foreign-currency debt ratings of provisional Not Prime.

The outlook on the long-term deposit and debt ratings is stable.

At the same time, Moody's Interfax downgraded the long-term national scale deposit rating of Probusinessbank to Baa2.ru from Baa1.ru. The Baa2.ru national scale rating maps to the B3 global scale long-term local-currency deposit rating. The national scale ratings carry no specific outlooks.

Moody's said the downgrade of Probusinessbank's debt and deposit ratings reflect the bank's very weak capital base, providing limited loss absorption cushion amid increasing risks in consumer finance sector, as well as its still material exposure to real estate development projects and high appetite for market risk.

The negative rating action on Probusinessbank's reflects: (a) the bank's very weak capital adequacy, which confers limited loss absorption buffer to potential losses; (b) increasing credit risks in unsecured consumer lending that worsen asset quality; and (c) significant investments in real estate and market risk exposure that puts additional pressure on earnings and capitalization.

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