New York, July 26 (FinanceEnquiry.com) – Analysts at Moody’s Interfax Rating Agency has downgraded the National Scale Rating (NSR) of European Trust Bank from Baa1.ru to Ba3.ru. The outlook was specific for the ratings.
In a research note published yesterday, the analysts mention that the downgrade indicates increasing exposure to real estate linked assets on the bank’s balance sheet, operational losses by the bank over three consecutive years as interest and commission income generated by the bank were not enough to cover the operational cost of the bank and potential threats to the bank’s currency modest capitalization levels due to low profitability and a high real estate linked assets burden.
European Trust Bank started to invest in private real estate linked mutual funds in 2008-2009. The net profit was mainly supported by gains from revaluation of investment properties parked in consolidated mutual funds. The rating agency notices that the risks associated with bank’s ability to divest from these real estate linked assets and report realized gains due to the still challenging credit conditions in Russia and low investors’ appetite for the risky real estate segment.
The bank has its headquarters in Moscow, Russia and as reported by a European Trust Bank the total assets of the bank have been RUB 15.7 billion and net income of RUB 35 million, the analysts say.
Analysts at Moody’s Interfax Rating Agency has downgraded the National Scale Rating (NSR) of European Trust Bank from Baa1.ru to Ba3.ru. The outlook was specific for the ratings.
In a research note published yesterday, the analysts mention that the downgrade indicates increasing exposure to real estate linked assets on the bank’s balance sheet, operational losses by the bank over three consecutive years as interest and commission income generated by the bank were not enough to cover the operational cost of the bank and potential threats to the bank’s currency modest capitalization levels due to low profitability and a high real estate linked assets burden.
European Trust Bank started to invest in private real estate linked mutual funds in 2008-2009. The net profit was mainly supported by gains from revaluation of investment properties parked in consolidated mutual funds. The rating agency notices that the risks associated with bank’s ability to divest from these real estate linked assets and report realized gains due to the still challenging credit conditions in Russia and low investors’ appetite for the risky real estate segment.
The bank has its headquarters in Moscow, Russia and as reported by a European Trust Bank the total assets of the bank have been RUB 15.7 billion and net income of RUB 35 million, the analysts say.
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