MOSCOW, Nov 20 (Reuters) - Sberbank and VTB , Russia's two largest lenders, could post losses on up to 27 percent of their loans, Moody's ratings agency said, warning the banks against cutting their bad debt provisions.
Under the worst-case scenario, state-run VTB alone would require a recapitalisation of around 150 billion roubles ($5.23 billion) to keep its capital adequacy ratio at 10 percent, the international agency said in a report.
"Based on our stress-tests, we believe that the expected loss on VTB's loan book is likely to be around 16 (percent) under our base-case scenario, and 27 (percent) in a worst-case scenario," it said.
The base-case should be manageable for VTB, to be absorbed by available capital without breaching the 10 percent minimum regulatory capital adequacy ratio, the agency said.
For Sberbank, losses are estimated at 15.5 percent and 26.5 percent by mid-2010, respectively, under the two scenarios, Eugene Tarzimanov, analyst at Moody's told Reuters on Friday.
The probability of the worst-case scenario is very low -- it will only occur if the economy collapses and (the) Russian rouble devalues significantly, Tarzimanov said.
"It is very difficult to estimate the banks' implied losses as a huge number of loans are being restructured," he said.
Russian banks are struggling with losses as bad loans rise as the economy has been hit by the first contraction in a decade.
Moody's view comes as a contradiction to the most recent forecasts of the central bank's chairman, Sergei Ignatyev, who believes the share of non-performing loans in portfolios could start falling as early as January 2010.
"The trend in asset quality is negative, as Moody's sees limited signs of economic recovery in Russia," agency said.
Russian banks should refrain from cutting provisions against bad debts, despite the recent signs the worst of the crisis is over, according to the central bank.
State-controlled Sberbank has recently said it has no need for fresh capital and expects that profits in 2010 will be much better than the 20 billion roubles it expects to earn in 2009.
VTB has reported a better than expected net loss of 11.0 billion roubles for the second quarter. It expects things to improve in the second half and hopes to return to pre-crisis profits in 2010.
However, analysts had been disappointed as the provisions cover ratio declined to 6.9 percent of gross loans at mid-2009, indicating the bank's low ability to absorb possible losses.
That is a low level based on anticipated credit losses, Moody's said, reiterating its previous view the current provisions with Russian banks were not sufficient.

"Moody's is also concerned that the industries most vulnerable to the crisis in Russia: finance, development and building construction, accounted for over one-third of the bank's (VTB) total loans," the agency said.

($1=28.71 Rouble)

(Reporting by Oksana Kobzeva and Dmitry Sergeyev; editing by Simon Jessop) Keywords: MOODYS/VTB SBERBANK (dmitry.sergeev@reuters.com; +7 495 775 1242; Reuters Messaging: dmitry.sergeev.reuters.com@reuters.net)

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