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The Association of Russian Banks and Coface are joining forces to provide small and medium-sized Russian companies with a rating system that will facilitate their access to bank credit.

To develop in their home market or abroad, small and medium-sized Russian companies need easier and quicker access to bank financing. They thus have to be able to prove to banks that they are reliable and capable of meeting financial commitments.

Responsible for the interests of the Russian financial system, and concerned with applying the government’s policy of supporting SMEs, the Association of Russian Banks (ARB) notes a lack of tools for measuring risk in its country, and how this has hampered effective distribution of credit by banks to SMEs.

The association has elected to rely on the recognised expertise of Coface, a world leader in credit insurance, company information and ratings, to develop a financial rating system for Russian companies.

A Russian financial rating agency will be created by Coface with ARB backing. The new agency will rate Russian companies at their request and thereby facilitate their access to credit by making procedures for granting loans simpler and more reliable for both lending banks and borrowing companies.

This rating will be the equivalent of that produced by traditional financial rating agencies as it will depend on direct dialogue with management of the company rated and confidential access to its accounting documents. Moreover, the ratings assigned on an alphabetic scale will be directly comparable to traditional ratings since they will also reflect the rated company’s default probability. There will nonetheless be an important difference with the Coface ratings remaining confidential, known only to rated companies themselves and banks they approach for loans. Rather than large listed companies or those issuing publicly traded bonds, the target is thus average companies seeking easier access to the banking system.

Surveys conducted by ARB and Coface of both Russian banks and foreign banks with operations in Russia have confirmed the importance of that need. ARB will ensure that the new ratings meet Russian financial institution requirements and back their use by the Russian financial system.

The Russian rating system will draw on the expertise developed by Coface in company risk analysis worldwide. The new solicited rating system constitutes the Coface company-rating system’s third component:

  • In 2000, Coface launched @rating Credit Opinions which reflect reasonable trade credit limits for 44mn companies worldwide based on a very simple scale.

  • In 2003, Coface launched @rating Scores, unsolicited financial ratings that reflect the statistical probability of any one of 4mn French companies defaulting based on collation of all information contained in Coface databases. Already used by thousands of companies and many financial institutions in France, @rating Scores will be extended to Portugal and Germany in 2004.

  • Coface has initiated the procedure for obtaining External Credit Assessment Institute (ECAI) status for @rating Scores in the framework of Basle II solvency rules and will seek the same status for the new financial rating system to be launched initially in