Fitch positive about planned merger of two Russian banks

MOSCOW, November 20 (RIA Novosti) - Fitch said on Wednesday it had affirmed Russia's MDM Bank's Long-term Issuer Default rating of 'BB' with a Stable Outlook and placed URSA Bank's Long-term IDR of 'B+' on Rating Watch Positive.

The statement by the international rating agency follows Wednesday's announcement of a planned merger between the two banks.

Both banks are on the list of the country's top 30 banks, and the new bank is expected to become a leading national banking institution.

The bank is expected to have a capital of 72 billion rubles ($2.5 billion) and assets totaling 523 billion rubles ($18.7 billion).

Oleg Vyugin, chairman of the MDM Bank board of directors, will chair the board of the holding company, to be established by shareholders of both banks to control the consolidation process.

Igor Kim, currently chairman of the URSA bank board of directors, will chair the management board of the consolidated bank, while Igor Kuzin, MDM Bank CEO, will be general director of the holding company.

The merger will take 12-18 months to complete. During this period, both banks will continue to function as independent entities. The deal will be finalized after all regulatory approvals.

Problems with liquidity experienced by the Russian banking sector amid the ongoing financial crisis have prompted a wave of banking consolidations in the country. Analysts say the number of credit institutions in Russia may contract by a third.