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Standard & Poors Ratings Services raised its long-term counterparty credit rating on MDM Bank to BB- from B+

19.12.2006 00:00

Standard & Poors Ratings Services raised its long-term counterparty credit rating on MDM Bank to BB- from B+. The outlook is stable. At the same time, the B short-term counterparty credit rating on the bank was affirmed.

According to S&P: Despite high banking competition, the Russian economic environment remains supportive, enlarging business opportunities for banks and reducing their credit risks linked to single corporate clients. MDM is currently owned 50-50 by two Russian businessmen, Andrey Melnichenko and Sergey Popov. The prospective change in the banks ownership structure, whereby Mr. Melnichenko will sell its entire stake in MDM to Mr. Popov (increasing his ownership to 90%) and Mr. Martin Andersson (10% stake; a member of MDMs strategy committee), is not expected to have an impact on the ratings on the bank.

S&P also stressed that: The rating action reflects our increased confidence that MDMs newly adopted strategy will positively affect its commercial and financial standing going forward, and the banks increasing business diversification and core profitability.

The agency stated that the stable outlook reflects their opinion that MDM's new strategy and related reorganization would go smoothly without setbacks, and would positively impact the banks customer franchise and revenue diversification. MDM's developed infrastructure positions the bank well to benefit from current positive economic trends and to mature with the market. The prospects for an upgrade would depend on: a successful execution of the strategic objectives; a longer track record of good financial performance; a reduction in funding concentrations; and the maintenance of an adequate capitalization.

Michel Perhirin, Chairman of the Management Board, commented: We welcome the change of rating which reflects the Banks improving fundamentals. We will continue to grow profitably in the Russian market in line with our strategy, simultaneously diversifying our asset and funding bases.

S&Ps press-release can be found on http://www.standardandpoors.ru


19.01.2007 14:19

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