Azerbaijan, Baku, Jan, 24 / Trend E. Kosolapova/
Fitch Ratings has affirmed Kazakhstan's Subsidiary Bank Sberbank of Russia OJSC's (SBK) and VTB Bank (Kazakhstan)'s (VTBK) Long-term foreign-currency Issuer Default Ratings (IDRs) at 'BBB-'.
The Outlook on SBK's IDR is Stable. Fitch has revised the Outlook on VTBK's IDR to Negative from Stable.
SBK's Long-Term local currency IDR: affirmed at 'BBB-'; Outlook Stable
Short-Term foreign currency IDR: affirmed at 'F3'
Viability Rating: upgraded to 'b+' from 'b'
Support Rating: affirmed at '2'
National Long-Term Rating: affirmed at 'AA(kaz)'; Outlook Stable
Senior unsecured debt rating: affirmed at 'BBB-'(EXP)
Senior unsecured debt national rating: affirmed at 'AA(kaz)(EXP)'
Subordinated debt rating: affirmed at 'BB+'
Subordinated debt National Rating: affirmed at 'AA-(kaz)'
VTBK's Short-Term foreign currency IDR: affirmed at 'F3'
Long-Term local currency IDR: affirmed at 'BBB-'; Outlook Revised to Negative from Stable
Support Rating: affirmed at '2'
National Rating: affirmed at 'AA(kaz)'; Outlook Revised to Negative from Stable
Senior unsecured debt rating: affirmed at 'BBB-'
Senior unsecured debt national rating: affirmed at 'AA(kaz)'
"SBK's and VTBK's IDRs are based on the high probability of support from the banks' respective owners, Sberbank of Russia (Sberbank, 'BBB'/Stable) and Bank VTB (JSC) (VTB, 'BBB'/Negative), if needed," Fitch said.
The parent institutions' propensity to support their Kazakh subsidiaries would likely be high, in Fitch's view, given the full ownership, the strategic importance for Sberbank and VTB of their expansions in the CIS region and internationally, the moderate cost of any potential support, common branding and significant potential reputational risks arising from a subsidiary default, Sberbank's and VTB's strong track record to date of supporting their subsidiaries, including SBK and VTBK, and the solid government relations of Russia and Kazakhstan.
The one-notch differential between the parents' IDRs and the respective subsidiary banks reflects the cross-border ownership, the limited importance of the subsidiaries due to their still small size relative to the parents' consolidated balance sheets, the significant operational independence of the Kazakh subsidiaries, and that the non-Russian operations of the two groups have yet to demonstrate their strong commercial viability (particularly relevant for VTBK).
"The Outlooks on the subsidiaries reflect those on the parent banks," Fitch said.
SBK is the sixth-largest bank in Kazakhstan, focusing primarily on corporate business. Sberbank currently owns virtually 100 percent of SBK.
VTBK, established in 2009, is currently the 20th-largest bank in Kazakhstan targeting predominantly corporate commercial banking business.