Expected credit rating rationale. According to the Bank of Russia and the issue documentation, Bank GPB (JSC)'s bond loan contains certain terms and conditions typical of a subordinated loan as defined in Article 25.1 of Federal Law dated December 12, 1990 No. 395-1 “On Banks and Banking Activities” and the Bank of Russia's Regulation dated July 04, 2018 No. 646-P "On the methodology for determining the equity (capital) of credit institutions (Basel III)." Subject to the approval from the Bank of Russia, this bond issue is expected to be categorized as a source of additional Tier-2 capital.

Provided that RU000A101ER8 bond is recognized as a subordinated bond loan, all creditor claims and default penalties under such subordinated bond loan would be satisfied after any other creditor claims in case Bank GPB (JSC) goes insolvent/bankrupt.

Provided that the Bank of Russia gives its consent for inclusion of the loan into additional Tier 2 capital sources, the terms of the issue provide for a complete or partial refusal to pay interest and a complete or partial default on the principal without giving rise to creditors' right to claim unpaid interest and principal should any of the below events occurs: 1) N1.1 ratio stays below 2% for six or more business days within a continuous period of 30 business days; 2) the Board of Directors of the Bank of Russia approves a plan for the latter’s participation in the implementation of bankruptcy prevention measures with respect to Bank GPB (JSC), or the Committee on Banking Supervision of the Bank of Russia approves a plan for the Deposit Insurance Agency’s participation in the implementation of bankruptcy prevention measures with respect to Bank GPB (JSC).

According to ACRA’s methodology, the final credit rating of this issue type has to be three notches below the final credit rating of Bank GPB (JSC) at AA+(RU).

The credit rating of Bank GPB (JSC) is based on its strong and sustainable business profile, adequate capital adequacy, and adequate liquidity and funding position. The rating is further supported by Bank GPB (JSC)'s critical systemic importance for the Russian financial market.

Key issue properties

Borrower

Bank GPB (JSC)

Borrower’s credit rating

AА+(RU), outlook Stable

Actual issuer

Bank GPB (JSC)

Type of security

Interest-bearing bond,
series GPB-T2-03D

Expected issue volume

USD 250.25 mln

ISIN

RU000A101ER8

Placement date

July 03, 2020

Maturity date

December 20, 2030

Earliest call option date

December 26, 2025

Regulatory disclosure

ACRA will assign a credit rating to RU000A101ER8 bond after the final documentation is presented by Bank GPB (JSC). In case of any significant discrepancies between the final documentation and the preliminary materials, ACRA may change the issue credit rating against the expected credit rating.

The expected credit rating has been assigned under the national scale for the Russian Federation based on the Methodology for Assigning Credit Ratings to Individual Issues of Financial Instruments under the National Scale of the Russian Federation, and the Key Concepts Used by the Analytical Credit Rating Agency within the Scope of Its Rating Activities.

The expected credit rating has been assigned to RU000A101ER8 bond issued by Bank GPB (JSC) for the first time. ACRA expects to assign the final credit rating within 90 days following the publication date of this press release.

The expected credit rating is based on data provided by Bank GPB (JSC), information from publicly available sources, and ACRA’s own databases. The expected credit rating is solicited, and Bank GPB (JSC) participated in its assignment.

No material discrepancies between the provided data and data officially disclosed by Bank GPB (JSC) in its financial statements have been discovered.

ACRA provided additional services to Bank GPB (JSC). No conflicts of interest were discovered in the course of expected credit rating assignment.

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