Also, the agency downgraded Raiffeisenbank (from Ba1 to Ba2), Rosbank (from Baa3 to Ba1), DeltaCredit Bank (from Baa3 to Ba1), ING Bank Eurasia (from Baa2 to Baa3), Banca Intesa (from Ba1 to Ba2) and Rusfinance Bank (from Ba1 to Ba2).

Moody’s downgraded Promsvyazbank (from Ba3 to B1), Bank Saint-Petersburg (from Ba3 to B1), Vozrozhdenie Bank (from Ba3 to B1), Zenit Bank (from Ba3 to B1), Center-Invest Bank (from Ba3 to B1), and lowered Bank Otkritie’s standalone bank financial strength rating (BFSR) to E+ from D-, though it confirmed the long-term debt and deposit ratings of the lender.

Raiffeisenbank has a parent company in Austria, Banca Intesa in Italy, ING in the Netherlands, while the remaining three lenders are daughters of the French banking group Societe Generale.

Moody’s expects "a prolonged recessionary environment in Russia resulting in a very challenging operating environment for the banks, impacting negatively their credit profiles," the report said.

Specifically, an accelerated inflation and low salary growth will reduce the creditworthiness of retail borrowers and weaken consumption, negatively affecting banks' asset quality in the retail, SME, construction and real-estate segments, the agency said. In addition, a substantial

devaluation of the Russian ruble has affected the debt-service capacity for borrowers with loans denominated in foreign currencies and, given the expected substantial contraction in imports, will negatively weigh on the creditworthiness of importers and trade companies, the report said.

Moody’s also said that an elevated interest-rate environment, which is likely to remain in place for the near future, has contributed to increased funding costs in the banking system. Given the reduced loan demand from creditworthy borrowers, the banks will struggle to pass increased funding costs to their customers, which will result in a contraction of their net interest income and, consequently, operating revenues, the agency said. Overall, the operating revenue contraction combined with substantially increased cost of risk is likely to generate a loss-making year for these banks, although some banks might remain profitable because of non-core income, the agency added.

Moody’s downgraded Russia's sovereign debt rating to speculative grade of Ba1 from Baa3 with a negative outlook, in the night of February 21. The ongoing crisis in Ukraine and the drop in oil prices were cited as the main reasons for the downgrade.