(Source: http://www.yatirimyeri.com)

Moody’s lowered the ratings of Sberbank, VTB and Gazprombank down to “thrash” level.

The International rating agency Moody’s lowered the credit ratings of the seven major financial institutions down to the “thrash” level. This was announced on Tuesday, February 24 in a press release on the agency’s website.

The decision of Moody’s affects Sberbank, VTB, Gazprombank, Rosselkozbank, Vneshekonombank, Alfa-Bank and the Agency for Residential Mortgage (ARM). Long-term ratings of the financial companies were lowered by one step: from Baa3 to Ba1 level with a negative forecast.

According to the press release, the ratings of these banks depend on the rating of the country, as far as they are supported by the Russian government. Further policy in relation to these financial institutions will depend on the Russia’s sovereign credit rating. The position of the banks is also influenced by the deteriorating economic situation in the country, which leads to a decrease in the number of loans and deposits.

In the future banks may require additional measures of support from the government due to this situation. Ba1 is the first level of the speculative category, also known as “thrash” one. This category is included into the non-investment level. This means that investors are not recommended to invest in these financial institutions.

Earlier on February 21 Moody’s lowered the credit rating of Russia from the investment grade Baa3 to the speculative Ba1 following another international agency Standard & Poor’s.