S&P Downgrades Outlooks For 13 Financial Institutions

LONDON Ratings agency Standard & Poor's on Friday cut the outlook for 13 Russian financial institutions, including Troika Dialog and Alfa Bank, from "stable" to "negative," citing increasingly tough trading conditions as global market turmoil worsens.

The squeeze on credit will put pressure on banks by increasing the cost of borrowing, tightening liquidity and reducing profits, S&P analysts, including Ekaterina Trofimova in Paris, wrote in a report.

The agency said that one positive development was the government's apparent willingness to address the market turmoil, including plans to provide banks with up to $38 billion in long-term loans and a $150 billion package to refinance corporations' and banks' foreign borrowings.

"The outlook provisions reflect our growing concerns about the adverse impact of the ongoing domestic and international market turbulence with regard to the financial and commercial fundamentals of many domestic financial institutions," Trofimova said. "These relate to growing credit risks, tight liquidity, pressured refinancing and weaker short-term growth prospects and reduced profitability, mainly due to trading losses."

The other outlook downgrades were for UralSib, Promsvyazbank, Vozrozhdenie, MDM Bank, Home Credit and Finance Bank, Petrokommerts, Natsionalnaya Faktoringovaya Kompaniya, Veles Capital, Tsentrokredit, Zapadno-Sibirsky Commercial Bank and Binbank.

S&P said credit was likely to become scarcer, exacerbated by extreme risk aversion in international markets, particularly given the sizeable amount of debt refinancing to take place in the coming 12 months.

The agency maintained a "stable" outlook on state-run and foreign-owned banks, including VTB, Gazprombank and the Russian unit of Raiffeisen International, because they will be less exposed to adverse market conditions.

Bloomberg, Reuters, MT