Ratings agency Fitch suspends commercial operations in Russia

© Reuters. FILE PHOTO: The offices of Fitch Ratings building appears empty in Canary Wharf, following the outbreak of the coronavirus disease (COVID-19), London, Britain, May 27, 2020. REUTERS/Dylan Martinez

LONDON (Reuters) -Fitch became the second major credit rating firm to suspend its commercial operations in Russia with immediate effect on Monday, saying its analysts outside the country would provide its coverage instead.

Ratings firms are facing the twin pressures of Western sanctions that ban transactions with targeted Russian firms and a new law passed in Russia last week that threatens jail terms of up to 15 years for spreading what the Russian government describes as "fake" information. The law makes it illegal to report any event that could discredit the Russian military.

Fitch and Moody's (NYSE:MCO), which also suspended its commercial operations in Russia at the weekend, downgraded Russia's sovereign rating by a record-equalling six notches earlier this month, warning the West's sanctions had raised the risk of a default.

Both firms, along with the other main rating agency, S&P Global (NYSE:SPGI), have also withdrawn or suspended ratings on a number of the most heavily-sanctioned Russian and Belarussian banks, including VTB, Promsvyazbank (PSB) and Sovcombank.

"Fitch Group has decided to suspend its commercial operations in Russia with immediate effect," Fitch said in a statement, saying that involved credit ratings and some other services it provides.

It added it would comply with "all applicable sanctions", support its Russia-based staff and "continue to provide the market with its independent analytical views through ratings coverage undertaken outside of Russia."

Russia's financial markets have been in a turmoil due to the sanctions imposed over its invasion of Ukraine, the biggest attack on a European state since World War Two.

The conflict, which Russia calls a "special operation", has triggered a blizzard of drastic rating moves and dire warnings from top investment banks about the impact on Russia's economy.

S&P has downgraded its Russia rating by an unprecedented 9 notches since Moscow launched its assault. The firm did not reply to emailed questions or reply to calls on whether it would also suspend its commercial operations in Russia.