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S&P May Downgrade VTB

It has been reported today that rating agency Standard & Poor’s (S&P) is reviewing VTB’s rating and may downgrade the bank following the purchase of the Bank of Moscow shares. According the S&P, it is still unclear how the acquisition of Bank of Moscow will affect VTB.

This is further evidence that VTB did not appear to have a strategy in relation to Bank of Moscow and that the deal was not commercially motivated.

VTB claims that it is still not fully aware of what the situation in Bank of Moscow is and is waiting for the Central Bank to finish its due diligence process. We can only expect that the results of this due diligence will support state-owned VTB’s argument. But isn’t it strange that the situation in Bank of Moscow, one of a few banks in Russia with an investment grade rating and with leading international banks, such as JP Morgan, Credit Suisse and Goldman Sachs, among its shareholders only six month ago, is worsening so suddenly?