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Moody's downgrades Ukrprombank ratings to Caa3/Caa3.ua (Ukraine)

November 10, 2009 | Moody's Investors Service

Ratings are on review for a possible downgrade

Moscow, November 10, 2009 -- Moody's Investors Service has today downgraded
Ukrprombank's local and foreign currency deposit ratings to
Caa3 from Caa2 and the National Scale Rating (NSR) of the bank to Caa3.ua
from B3.ua, and placed these ratings on review for a possible further
downgrade. Concurrently, the rating agency has affirmed Not Prime short-term
deposit ratings and E Bank Financial Strength Rating (BFSR) of the bank,
which now maps to a Caa3 Baseline Credit Assessment. The bank's ratings do
not benefit from any systemic support.

This rating action follows the recent announcement by Ukrainian government
officials that Ukrprombank's deposits and most of its performing loans would
be transferred to Rodovid Bank, which is fully controlled by the government.
The amount of the deposits to be transferred is expected to be about UAH7
billion (USD875 million). The officials indicated that the deposit transfer
will likely be completed in November 2009.

According to Moody's, the announced transfer increases the expected losses
for the bank's remaining creditors (other than retail depositors) and
increases the probability of the liquidation scenario for Ukrprombank.

Higher expected losses for creditors would be likely in case of transfer,
since most of Ukrprombank's performing assets would be transferred to
Rodovid bank, whilst the remaining creditors would be left with
non-performing assets with low recovery values. Similarly, the transfer of
retail deposits decreases the likelihood of rescue of Ukrprombank by the
Ukrainian government, while transfer of performing assets reduces
attractiveness of the bank for potential strategic investors.
Consequently, based on the anticipation of higher expected losses for the
remaining creditors and on the increased probability of the liquidation
scenario for the bank, Moody's has downgraded the bank's deposit ratings to
Caa3 from Caa2 and placed them on review for a possible further downgrade.

The previous rating action on Ukrprombank was implemented on 22 January
2009, when Moody's downgraded the bank's BFSR to E from E+, its deposit
ratings to Caa2 from B2, and its National Scale Rating (NSR) to B3.ua from
A3.ua. At that time, the bank's deposit ratings were placed in review with
direction uncertain.

The principal methodologies used in rating Ukrpombank are "Bank Financial
Strength Ratings: Global Methodology" and "Incorporation of Joint-Default
Analysis into Moody's Bank Ratings: A Refined Methodology". These can be
found at www.moodys.com in the Rating Methodologies sub-directory under the
Research & Ratings tab. Other methodologies and factors that may have been
considered in the process of rating these issuers can also be found in the
Rating Methodologies sub-directory on Moody's website.

Headquartered in Kiev, Ukraine, Ukrprombank reported total assets of
UAH15.9 billion and total equity of UAH1.9 billion according to Ukrainian
Accounting Standards at year-end 2008.

Company: Ukrprombank

Full company nameUkrainsky Promyslovy Bank Ltd
Country of riskUkraine
IndustryBanks

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