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LONDON, February 24. /TASS/. Moody’s rating agency downgraded seven Russian financial institutions - Sberbank, Bank VTB, Gazprombank, Russian Agricultural Bank, Agency for Housing Mortgage Lending, Vnesheconombank and Alfa-Bank, it reported Tuesday. The rating actions "follow the weakening of Russia's credit profile, as reflected by Moody's downgrade of Russia's government debt rating to Ba1 from Baa3 on February 20, 2015," the report said.
Moody's downgraded Russia's sovereign debt rating to speculative grade of Ba1 from Baa3 with a negative outlook, in the night of February 21. The ongoing crisis in Ukraine and the drop in oil prices were cited as the main reasons for the downgrade.
"The ratings incorporate uplift based on Moody's assessment of the likelihood of government support being made available to each institution, in case of need," the rater said.
The supported ratings of all seven entities have been lowered by one notch. The outlook on the long-term ratings of these institutions is negative, in line with the outlook on the sovereign rating. The negative outlook reflects the fact that any further downgrade of the sovereign rating could affect Moody's assessment of ratings uplift resulting from systemic support assumptions, the agency said.
The downgrade is due to Moody's expectation that "the prolonged recessionary environment in Russia will produce a very challenging operating environment for the country's leading banks and thereby impact their financial fundamentals", the agency said.