Fitch could downgrade MTS Bank

Fitch Ratings said it placed MTS Bank's long-term issuer default rating of B+ and support rating of 4 on Rating Watch Negative.

The action follows a similar action on the bank's majority shareholder, Sistema JSFC (BB-/negative watch) following a Russian court injunction to freeze Sistema's significant assets including its 31.76% stake in PJSC Mobile TeleSystems (BB+/negative watch), in relation to claims filed by Rosneft against Sistema.

Fitch said the issuer default rating and support rating reflect its view that MTS Bank would likely be supported, in case of need, by Sistema and/or its subsidiaries. This view is mainly based on: (a) The track record of capital support, including RUB 15 billion of equity provided in 2016; (b) MTS Bank's role as a treasury for the group; and (c) the brand association with Mobile TeleSystems, a major operating subsidiary of the group.

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