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Moody’s upgrades Alfa Bank’s ratings to D/Ba2
11 Dec 2003

According to Moody's, the rating upgrade reflects:

the bank's strengthening franchise through a well-planned expansion strategy, the international presence being a competitive strength
improving financial performance
gradually reducing customer concentrations on both sides of Alfa's balance sheet
gradually declining levels of related-party business - Alfa has shifted its strategic priorities towards commercial banking and away from house-banking for the Alfa Group
the gradually improving operating environment.

In Moody's view, the broad product range - an approach chosen by Alfa - may become an efficient hedge during periods of market volatility. The Ba2 ratings of long-term foreign currency deposits and senior debt do not incorporate any potential support from the state authorities in case of distress. The upgrade also reflects Alfa's strengthening retail franchise - the bank remains the country's second-largest retail deposit collector in Russia. Growing focus on retail lending should help to further diversify the loan portfolio and strengthen Alfa's franchise. However, Moody's cautions that most potential retail clients lack any credit history - a situation that will probably take some time to improve on - while credit scoring models will also take time to calibrate.

Alfa-Bank Russia

Alfa-Bank, founded in 1990, has developed rapidly to become one of Russia's largest privately owned banks. It provides a full range of banking services — corporate banking, retail banking, investment banking, asset management and trade finance. The Bank has 229 branches over nine time zones in Russia, Kazakhstan and the Netherlands and subsidiaries in the United Kingdom and the United States.

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