Moody's downgrades three largest Russian lenders

Moody's downgrades three largest Russian lenders

Published: July 9, 2013

Ratings agency acts on weaker government position.

Moody’s, the ratings agency, has downgraded Russia’s three largest lenders. Sberbank and VTB Group have both been downgraded by one notch, Russian Agricultural Bank by two.

Sberbank was moved from A3 to Baa1, VTB from Baa2 to Baa1 and Russian Agricultural Bank from Baa1 to Baa3. The outlook for all three ratings is stable.

The agency argues that the Russian government is less able to back the state lenders than it was in 2007-2008 due to over-reliance on a high oil price. The federal budget needs oil to cost US$105 a barrel to break even – a level deemed over-optimistic by Moody’s. In addition, the country’s Reserve Fund and National Wealth Fund are less healthy than they were four years ago.