Standard & Poor’s Ratings Services has assigned its single-‘B’-minus long-term senior unsecured debt rating to the US$175mn three-year notes issued by the Netherlands-based Alfa-Russia Finance BV and guaranteed jointly and severally by ABH Financial Ltd, based in the British Virgin Islands, and by Alfa Bank (B-/Stable/C).

“The ratings on Alfa Bank reflect the bank’s good business franchise and improved financial profile and product diversification in the context of better prospects for macroeconomic stability in Russia,” says Standard & Poor’s credit analyst Ekaterina Trofimova.

These positive factors are offset by the continued high risk inherent in the Russian economic and banking environment, as well as by the bank’s large single-party concentrations and leveraged financial profile.

Alfa Bank is one of the five largest Russian banks in terms of breadth of operations and reported assets (US$3.1bn at June 30, 2002). Like other private-sector banks, however, it holds a relatively small market share of less than 5% of total banking assets in the Russian banking system, which is dominated by the state-owned banks, notably Sberbank.

The degree of concentration in the bank’s assets and deposits is high, both within and outside the Alfa Group Consortium (AGC), the financial-industrial group to which Alfa Bank belongs.