Standard Poor's reduced the rating of MDM-Bank

International rating agency Standard & Poor's downgraded the long-term counterparty credit rating of Russia's MDM Bank to 'BB' to 'BB-'. Long-term rating remains in the list CreditWatch ( "rating on review") with a negative outlook, where he was placed on Dec. 3, 2008 following the announcement that the shareholders of MDM-Bank and URSA Bank (no rating given) plan to merge the banks. At the same time, short-term counterparty credit rating was affirmed at "B", said the agency. "Lowering the rating due to the increase in Russia's economy systemic risks that impact on financial results and liquidity position, MDM-Bank", - said the credit analyst of Standard & Poor's Sergei Dementiev. In particular, the lowering of the rating reflects a decline in the quality of service credit, a high concentration of the resource base, which is dominated by market borrowings, income volatility, as well as the risks of integration. However, the positive effect on the top have a stable competitive position of the bank, sufficient liquidity, effective cost management and corporate governance. Ratings reflect the creditworthiness of MDM-Bank as an independent business units to assess their own creditworthiness ratings do not add extra steps for the opportunity to obtain emergency support from the shareholders or the Government of the Russian Federation. The reason that the ratings remain on the list CreditWatch with the negative outlook is the recent announcement of the merger of MDM Bank and URSA Bank. Given the higher risks of URSA Bank, analysts Standard & Poor's believes that the transaction poses for MDM-Bank with a high risk of execution, as well as the risk of refinancing, which in the short term will lead to a weakening of the creditworthiness of the bank and put pressure on its liquidity. The integration of these organizations in the banking platform URSA Bank is very difficult task. Expected that integration will be completed within 12-18 months. "We expect that the ratings will be withdrawn from the list CreditWatch, where they are with the negative forecast for the next six months after completion of the legal merger of MDM Bank and URSA Bank", - stressed S. Dementev.