Ukraine Prominvestbank’s Ba2 heads for downgrade

Moody's Investors Service has placed the Ba2 long-term local currency deposit rating of Prominvestbank on review for possible downgrade due to the lowering of the bank's Baseline Credit Assessment from B1 to B2. At the same time, Moody's has affirmed the B2 foreign currency bank deposit rating, which remains constrained by the country ceiling, the Aa1.ua National Scale Rating (NSR) and E+ Bank Financial Strength Rating (BFSR).
"The rating action reflects Moody's concerns that the run on deposits currently being experienced by the bank may have a significant negative impact on its franchise, already tight liquidity position and the funding profile," explained Yaroslav Sovgyra, VP-Senior Credit Officer at Moody's Moscow office.
The rating agency notes that the bank's liquidity was recently supported by a UAH5 billion refinancing facility from the National Bank of Ukraine, thus indicating a high degree of systemic support, the expectation of which was already incorporated into the bank's ratings. However, the outflow of deposits currently being experienced by the bank is likely to have a negative long term impact on the bank's franchise, thus weighing down its stand-alone Baseline Credit Assessment (BCA) of B2 and, consequently, the bank's supported deposit ratings.
Headquartered in Kiev, Ukraine, Prominvestbank reported unaudited consolidated total assets of UAH27.5 billion (US$5.7 billion) and total equity of UAH 2.8 billion (US$577 million) according to Ukrainian Accounting Standards at June 30.