The existing instability on the Russian banking market, which created sudden difficulties with short-term funding for all Russian private banks, did not directly affect the banks' rating assigned by Standard & Poor's, reads the agency's press release received by RIA Novosti on Thursday.
Termination of activity of GUTA-bank, the recently revealed insolvency of two other Russian banks, as well as rumors about problems with the resource base in other financial institutions caused the fall of market volumes of interbank crediting and an outflow of private deposits, says the press release.
Despite the fact that the situation on the banking market is very risky in the short term prospect, we do not think the Russian financial sector stands on the brink of a crisis similar to one in 1998, said Standard & Poor's analyst Irina Penkina. Measures to reduce reserve requirements undertaken by the Central Bank seem to have calmed down the market. Besides, as of now, the liquidity of the Russian economy and the financial and budget sphere are in good condition, she added.
Since the moment agitation appeared on the market connected with termination of operations by GUTA-bank, Standard & Poor's did not make changes in Russian banks' ratings. The agency is already taking into account the institutional weakness of the Russian banking market in ratings assigned to 21 banks in Russia, says the press release.
Private banks' ratings are at the levels from CCC to B+. The average level of long-term credit ratings of Russian banks constitutes B-, which reflects a high level of credit risk and high sensibility to unfavorable conditions in the economy and business circles.
Instability on the banking market observed lately corresponds to the long-term idea of Standard & Poor's about the high level of institutional risk in the Russian bankingsector, caused, in particular, by the inefficiency of regulation and low transparency of the structure of banks' property, said S&P analyst Scott Bugie. If the present unstable situation renders long-term negative influence on any of the rated banks, Standard & Poor's will take a relevant rating action, he said.
