S&P: Promsvyazbank to positive

S&P said it revised the outlook for Promsvyazbank to positive from stable and affirmed the bank’s BB-rating.

“We consider that Promsvyazbank’s role for the government might be strengthening as the bank becomes dedicated to servicing the Russian defense sector. The stronger role for the government would, in our view, lead to a higher likelihood that the bank will receive extraordinary government support if needed,” said S&P in a press release.

The Russian parliament approved a bill, which S&P expects to become law next year, that would give the bank preferences to service the state defense order, notably default consideration to service contractors of the state defense procurement. Choosing another eligible bank would need a separate approval from government bodies.

“It is also expected that Promsvyazbank’s share in servicing the state defense order will increase gradually to around 70% in the next two years from nearly zero two years ago,” said S&P.

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