“The outlook on the long-term deposit ratings was changed to stable reflecting Moody’s expectation that the bank’s financial fundamentals will remain broadly unchanged over the next 12-18 months,” the rating company said in an emailed statement on Tuesday. The upgrade came five days after the bank announced that Russia’s Otkritie Financial Corporation sold its shareholding to a company controlled by RCB’s chief executive officer Kiril Zimarin who increased his stake to 49.9%.

“The upgrade of the baseline credit assessment to b2 from b3 reflects RCB Bank’s strong solvency, reflected in high capital and low levels of problem loans as well as Moody’s expectation that the bank will continue to grow its standalone business and strengthen its franchise,” Moody’s said. “Although currently most of RCB business stems from its links with VTB, with more than 60% of RCB Bank’s loans guaranteed by VTB, RCB Bank has been strengthening its stand-alone franchise over the last few years. Moody’s expects the bank to gradually grow further its standalone operations both with foreign customers based in Cyprus and to a lesser extent with Cypriot customers”.

The rating company added that following the reduction of VTB’s shareholding from 60% in 2014 to now 46.3%, “RCB continues to have strong ties with VTB which were tested during the financial crisis in Cyprus”.

Moody’s said that the ratio of the bank’s shareholder equity to total assets rose to 5.8% in December from 4.6% twelve months before, RCB’s tier 1 capital ratio and non-performing loans ratio stood at 20.8% and 0.8% respectively, compared to around 46% in the banking system.

Source: Cyprus Mail