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Moody’s puts negative outlook on russian banking system

October 25, 2011, 12:42 UTC+3

The Moody’s rating agency has changed the Russian banking system development outlook from “stable” to “negative.”

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MOSCOW, October 25 (Itar-Tass) — The Moody’s rating agency has changed the Russian banking system development outlook from “stable” to “negative.” The reason for this was the agency’s concern over the fact the RF lending institutions are experiencing the economic situation worsening. In the view of experts, the world economy will exert pressure on Russian banks.

Moody’s see the cause of the future problems in the instability of the global economy and poor prospects for its growth, Rossiiskaya Gazeta writes. This will also affect Russia. According to the agency forecast, the GDP growth next year will slow down to 2.8 percent from 3.8 percent in 2011. This will make banks to reserve more on possible losses on loans. The level of capital adequacy of Russian lending institutions may decrease from the current 16.7 percent to 14 percent, and in the event of worsening of the situation in the Euro zone it may drop even to 10 percent, international experts believe.

If the situation in the Euro zone develops according to the worst scenario, Moody’s does not rule out that the capital adequacy ratio can drop below the permitted by law 10 percent level, RBC Daily stresses. “Nevertheless, bank owners will not allow the capital adequacy ratio to drop below the minimum,” believes Moody’s Vice President Yevgeny Tarzimanov. Over the past two months the situation in the banking sector has indeed deteriorated, therefore, Moody’s outlook is quite justified, believes BDO partner in Russia Denis Taradov.

The Moody’s outlook change to the negative carries no threat to the banking sector – there will be not total lowering in the ratings of Russian banks, Kommersant is certain. “Despite of the negative outlook for the Russian banking system development, individual ratings of 91 percent of Russian banks rated by Moody’s remain ‘stable,’” the agency reports.

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