Fitch lifts MDM Bank view to positive

Fitch Ratings said it changed the outlooks of Russia-based MDM Bank and its ultimate parent MDM Holding GmbH to positive from stable. The agency also affirmed the bank's issuer default and foreign-currency senior unsecured debt ratings at BB-, subordinated debt rating at B+, national long-term and ruble-denominated senior unsecured debt ratings at A+(rus), short-term rating at B, individual rating at C/D and support rating at 4.

The agency affirmed MDM Holding's issuer default rating at BB-, short-term rating at B, individual rating at C/D and support rating at 5.

"MDM Bank's strategy to push more comprehensively into the middle market retail and SME segments, including in the Russian regions, may push up costs and dampen performance indicators in the near term, but is important in order to build a more diversified platform for future, sustainable revenue and earnings generation," James Longsdon, senior director in Fitch's financial institutions department in London, said in an agency rating.

"We believe MDM Bank has the management and risk management know-how to deliver on its strategy and this could benefit its ratings over the medium term. The positive outlook also reflects our view of the improving, albeit still challenging, Russian operating environment and the enhanced prospects for the country's leading privately owned banks."

The bank's ratings continue to reflect the significant rollover risk associated with its reliance on the wholesale markets for its funding, its moderate profitability and the credit and liquidity risks associated with a rapid growth trajectory, Fitch said.

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