Russia’s recession and the decline in global oil prices will affect banks across six CIS countries in 2015-2016, said Moody’s Investors Service in a report, entitled 'Banks in CIS feel pinch from Russia downturn and low oil prices'.
“We expect that CIS banks will be affected by lower oil prices and Russia’s recession through pressures on local currencies, declines in remittances from CIS nationals working in Russia, and lower exports from CIS countries to Russia,” Moody’s analyst said.
The CIS banks will primarily be affected through the impact of currency weakness in most CIS countries. The main problem arising from these foreign exchange devaluations is the banks’ large portfolio of loans denominated in foreign currency which are provided to borrowers with no foreign exchange earnings.
These factors are captured in the current ratings of banks in the six CIS countries covered in the report: Belarus, Kazakhstan, Azerbaijan, Tajikistan, Uzbekistan, and Armenia.
