Credit ratings for Russian lenders such as VTB Bank, pictured in Moscow, have been frozen for five months as Western sanctions bite. (AP Photo/Pavel Golovkin)
Ratings agencies provide an independent assessment of the creditworthiness of a country or business to help investors make financial decisions. They play a vital role for banks as they seek access to capital and help determine their borrowing conditions.
"Freezing credit ratings will allow leading banks to continue to place federal budget funds to maintain their profitability, to attract funds from the compensation fund of participants in shared construction," the government said. "In addition, banks, as before, will be able to issue independent guarantees to businesses."
Russia said that the decision will help to reduce the harm done by sanctions imposed by "unfriendly states" — many Western governments — on the country's banks.
The European Union has barred Russia from having access to European credit rating agencies in a move hoped to deter investors from funding Vladimir Putin's regime.
Leading global credit rating agencies such as Moody's, S&P and Fitch have downgraded Russian government debt deeply into junk status: Fitch has warned of imminent default as Western financial sanctions tighten.
Fitch, S&P and Moody's said this week that they will withdraw ratings on Russian entities and their subsidiaries before April 15.
Europe, the U.K. and the U.S. hope to cut off Russian banks from Western funding. Britain has slapped sanctions on lenders including VTB Bank, whose U.K. subsidiary has been dropped from London stock exchange listings, Gazprombank and state-owned Russian Agricultural Bank. Britain has also frozen the assets of Russian lenders.
The EU has also shut seven major Russian banks out of the SWIFT messaging system that facilitates global financial transactions.
--Editing by Ed Harris.
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