Bloomberg News

RenCap Cuts Price Estimates for Russian Banks on Credit Risks

October 01, 2008

Russian bank shares are worth less than earlier this year because access to funds has been cut and credit quality may deteriorate, Renaissance Capital said.

The Moscow-based investment bank, which focuses on emerging markets, cut its price estimate for OAO Sberbank to $2.70 (69 rubles) from $4.08 a share. Russia's biggest bank advanced 8.3 percent yesterday to close at 43.69 rubles on the Micex Stock Exchange.

``Slowing growth, less access to credit and higher lending rates should naturally lead to deterioration in asset quality,'' Renaissance analysts David Nangle and Svetlana Kovalskaya said in a report today.

RenCap initiated coverage of VTB Group (VTBR), Russia's second- biggest bank, with a ``neutral'' recommendation and a price estimate of $4.60 a global depositary receipt. Sberbank is the only Russian bank with a ``buy'' recommendation at Renaissance.

Russian banks are charging domestic companies interest rates of as much as 20 percent on short-term ruble-denominated loans, Renaissance Capital said.

Bank Vozrozhdenie's price estimate was cut to $41.70 from $65, while Bank Saint Petersburg's estimate was cut to $4.25 from $7.22.

Billionaire Mikhail Prokhorov agreed to buy 50 percent minus one voting share of Renaissance Capital for $500 million last month.

To contact the reporter on this story: William Mauldin in Moscow at

To contact the editor responsible for this story: Daniel Hauck at

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