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Moody's downgrades KIT Finance ratings

MOSCOW, September 17 (RIA Novosti) - Moody's has downgraded the long-term foreign currency and local currency deposit ratings of Russian investment bank KIT Finance from B2 to Caa2, the international rating agency said on Wednesday.

The agency also lowered the bank's E+ bank financial strength rating to E.

The agency said the lowered ratings "capture the fact that the bank has defaulted on its obligations under margin calls on repurchase transactions, and has incurred significant asset quality problems that have wiped out most of the bank's capital."

"This has mainly been the result of the current extremely adverse market conditions on the bank's huge risk positions resulting from its high risk appetite," Moody's added.

The investment bank said on Wednesday it was in talks with a strategic investor "with the aim of overcoming difficulties in payments under repo transactions, which appeared after a sharp decline of the stock market."

World markets have been unsettled by the fallout from the mortgage crisis in the United States and the collapse of investment bank Lehman Brothers.

Based in Moscow, KIT Finance is a multiple business line entity, dominated by investment and corporate banking, and mortgage activities.

As of September 1, 2008, the bank's charter capital stood at 3 billion rubles ($118 million) and equity capital at 14.8 billion rubles ($580 million). It is ranked among the 30 largest banks in Russia.

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