OREANDA-NEWS. July 22, 2011. Fitch Ratings has affirmed MDM Bank Long-term Issuer Default Rating (IDR) at ’BB’ with Stable Outlook.

The affirmation of MDM’s ratings reflects Fitch’s base-case expectation that the Bank should be able to gradually recover after asset quality deterioration as the borrowers’ repayment ability and the bank’s performance should benefit from the improved operating environment. In Fitch view, MDM’s new strategy, which focuses on small and medium-sized businesses with greater emphasis on asset quality, is also aimed at reducing risks.

On the upgrades, Fitch said: “Mitigating credit risks and supporting the rating is a high capital buffer (Basel I total and Tier 1 ratios of 20.3% and 18.6%, respectively, at end-2010), which allows for the creation of an extra RUB31bn of reserves (12% of loans) before the Basel I total capital ratio drops to 12%. This would be sufficient to absorb losses, even if several of large borrower defaults happen, before MDM would require new capital. Reserve coverage of current NPLs was a satisfactory 83% at end-2010”.

Konstantin Rogov, CFO of MDM Bank, commented that MDM Bank’s ratings remain among the highest in the segment of privately-owned Russian banks, and reflects its strong capital and liquidity positions.