• On 21 May 2013, Moody’s announced rating actions on MBIA Insurance Corp., National Public Finance Guarantee Corp., MBIA Inc. and other related entities. Because of the large number of credits across several asset classes affected by these rating actions, including Moody's-rated securities that are guaranteed or "wrapped" by these companies, ratings appearing on this website may not yet reflect current information. For current information on affected credits, please visit www.moodys.com/fig.
Please Note
We brought you to this page based on your search query. If this isn't what you are looking for, you can continue to Search Results for ""
The maximum number of items you can export is 3,000. Please reduce your list by using the filtering tool to the left.
Close
Close
Email Research
Recipient email addresses will not be used in mailing lists or redistributed.
Recipient's
Email

Use semicolon to separate each address, limit to 20 addresses.
Enter the
characters you see
Enter the above code here:
Can't read?
Try a new set
Send Cancel
Close
Email Research
Thank you for your interest in sharing Moody's Research. You have reached the daily limit of Research email sharings.
OK
Close
Thank you!
You have successfully sent the research.
Please note: some research requires a paid subscription in order to access.
OK
Rating Action:

Moody's downgrades Cypriot banks' deposit and senior debt ratings to Caa3 from Caa2; on review for downgrade

Global Credit Research - 22 Mar 2013

Heightened uncertainty over recapitalisation prompts review

Limassol, March 22, 2013 -- Moody's Investors Service has today downgraded to Caa3, from Caa2, the deposit and senior unsecured debt ratings of Bank of Cyprus Public Company Limited, Cyprus Popular Bank Public Co Ltd and Hellenic Bank Public Company Ltd. These ratings have also been placed on review for downgrade. At the same time, Moody's affirmed the Bank Financial Strength Ratings (BFSRs) at E, but added that the standalone credit assessments for Bank of Cyprus and Hellenic Bank, have been lowered to ca from caa3. Cyprus Popular Bank's standalone credit assessment continues to map to ca.

The actions on the deposit and senior unsecured debt ratings reflect (1) Moody's expectation of material losses for bank depositors; (2) the risk of further deposit controls once the banks reopen; and (3) the heightened uncertainty regarding the banks' recapitalisation plans.

The alignment of the banks' standalone credit assessments at ca reflects underlying risks related to (1) the increased likelihood of material deposit outflows; and (2) the long-term impairment to the banks' business models resulting from the recent turmoil.

A full list of ratings is provided at the end of this press release.

RATINGS RATIONALE

RECENT EVENTS

On 19 March, the Cypriot parliament rejected a draft law to impose a tax levy that would result in a 6.75% loss on deposits between EUR20,000 and EUR100,000 and 9.9% on larger amounts. The imposition of losses is an integral condition of the support programme for bank recapitalisations proposed by the European Central Bank, the European Commission and the International Monetary Fund (commonly referred to as the Troika). On 21 March the European Central Bank stated that Emergency Liquidity Assistance (ELA) would only remain available to Cypriot banks if an acceptable support programme is in place by 25 March. The stalemate between the Cypriot government and the Troika has heightened uncertainty over the bank recapitalisation plan.

LOSSES, LIQUIDITY STRESS AND UNCERTAINTY DRIVE DOWNGRADES AND REVIEW

Today's actions on the banks' deposit and senior unsecured debt ratings reflect the rating agency's expectation of material losses for bank depositors, the risk of further controls to contain deposit outflows once the banks reopen, and the heightened uncertainty regarding the banks' recapitalisation or resolution plans.

The situation in Cyprus remains very fluid and the risk of significant losses has increased, as has the risk of a bank liquidation scenario.

Accordingly, Moody's review will assess the impact of the measures ultimately adopted to address the banking crisis. To this end, the review will focus on (1) the magnitude of losses imposed on depositors and/or senior unsecured bondholders; (2) the risk of continued deposit controls once the banks reopen; and (3) implementation risks associated with any agreed measures and the potential need for additional capital support resulting from further asset quality deterioration.

EROSION OF DEPOSITOR CONFIDENCE WEAKENS BANKS' STANDALONE PROFILES

The lowering of Bank of Cyprus' and Hellenic's standalone credit assessments to ca, and the affirmation of Cyprus Popular Bank's standalone credit assessment at ca, captures Moody's view of (1) the increased likelihood of accelerated deposit outflows, weakening the banks' already stressed deposit-funding bases; and (2) the long-term impairment to the banks' business models resulting from the recent turmoil.

Firstly, despite expectations that central bank funding will remain available if a recapitalisation plan is reached, Moody's considers that the risk of accelerated deposit outflows once the banks reopen has risen significantly. An acceleration of outflows would further destabilise the domestic banking system.

Secondly, Moody's believes that the banks' franchises and business models will remain impaired over the long term. The rating agency bases its view on (1) the weakening of market confidence, owing to the recent announcement regarding depositor losses; and (2) the signal that the European authorities aim to reduce the size of the Cypriot banking sector to the EU average over time (Cyprus' total banking sector assets totaled 697% of GDP at the end of 2011, compared with 354% for the EU).

WHAT COULD MOVE THE RATINGS UP/DOWN

Downwards pressure on the banks' ratings would develop following (1) a failure to secure a programme for bank recapitalisations or to maintain external liquidity support; and/or (2) higher loss rates for bank depositors or creditors (compared to the amounts rejected by the Cypriot Parliament on 19 March -- 6.75% loss on deposits between EUR20,000 and EUR100,000 and 9.9% on larger amounts); and/or (3) sustained deposit controls; and/or (4) uncertainty regarding the Cypriot authorities' and the banks' capacity to implement an agreed recapitalisation programme and/or (5) a lowering of the country risk ceiling for Cyprus.

As indicated by the review for downgrade, upwards rating pressure is currently limited. Moody's may confirm the ratings at their current levels if an agreement to recapitalise the banks is reached, provided that the agreement (1) does not necessitate increased burden-sharing of losses; and (2) restricts implementation risks.

LIST OF AFFECTED RATINGS

Bank of Cyprus Public Company Limited:

- Deposit and senior unsecured debt ratings: Downgraded to Caa3, on review for downgrade, from Caa2, negative outlook

-Short term deposit and commercial paper ratings: Affirmed at Not Prime

- Subordinated debt rating: Affirmed at (P)C

- Junior subordinated notes rating: Affirmed at (P)C

- Standalone Bank Financial Strength Rating: Affirmed at E, now mapping to a standalone credit assessment of ca, from caa3

The senior unsecured and deposit ratings are on review for downgrade. No outlook is currently assigned to the E BFSR, short term deposit and commercial paper ratings, subordinated and junior subordinated ratings.

++++++

Cyprus Popular Bank Public Co Ltd:

- Deposit and senior unsecured debt ratings: Downgraded to Caa3 on review for downgrade, from Caa2 negative outlook

-Short term deposit ratings: Affirmed at Not Prime

- Subordinated debt rating: Affirmed at C

- Standalone Bank Financial Strength Rating: Affirmed at E, mapping to a standalone credit assessment of ca

The senior unsecured and deposit ratings are on review for downgrade. No outlook is currently assigned to the E BFSR, short term deposit ratings and subordinated ratings.

Egnatia Finance plc (the funding subsidiary of Cyprus Popular Bank):

- Senior unsecured debt rating: Downgraded to (P)Caa3, on review for downgrade, from (P) Caa2, negative outlook

- Subordinated debt rating: Affirmed at (P)C

The senior unsecured debt ratings are on review for downgrade. No outlook is currently assigned to the subordinated debt ratings.

++++++

Hellenic Bank Public Company Ltd:

- Deposit ratings: Downgraded to Caa3 on review for downgrade, from Caa2 negative outlook

- Short-term deposit and commercial paper ratings: Affirmed at Not Prime

- Standalone Bank Financial Strength Rating: Affirmed at E, now mapping to a standalone credit assessment of ca from caa3

The deposit ratings are on review for downgrade. No outlook is currently assigned to the E BFSR, short term deposit and commercial paper ratings.

The principal methodology used in these ratings was Moody's Consolidated Global Bank Rating Methodology published in June 2012. Please see the Credit Policy page on www.moodys.com for a copy of this methodology.

REGULATORY DISCLOSURES

For ratings issued on a program, series or category/class of debt, this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the rating action on the support provider and in relation to each particular rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this rating action, and whose ratings may change as a result of this rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.

Melina Skouridou
Analyst
Financial Institutions Group
Moody's Investors Service Cyprus Ltd.
Kanika Business Centre
319 28th October Avenue
PO Box 53205
Limassol CY 3301
Cyprus
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454

Yves J Lemay
MD - Banking
Financial Institutions Group
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454

Releasing Office:
Moody's Investors Service Cyprus Ltd.
Kanika Business Centre
319 28th October Avenue
PO Box 53205
Limassol CY 3301
Cyprus
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454

Moody's downgrades Cypriot banks' deposit and senior debt ratings to Caa3 from Caa2; on review for downgrade
No Related Data.

 

© 2013 Moody's Investors Service, Inc. and/or its licensors and affiliates (collectively, "MOODY'S"). All rights reserved.

 


CREDIT RATINGS ISSUED BY MOODY'S INVESTORS SERVICE, INC. ("MIS") AND ITS AFFILIATES ARE MOODY'S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND CREDIT RATINGS AND RESEARCH PUBLICATIONS PUBLISHED BY MOODY'S ("MOODY'S PUBLICATIONS") MAY INCLUDE MOODY'S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES. MOODY'S DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL, FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS AND MOODY'S OPINIONS INCLUDED IN MOODY'S PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. CREDIT RATINGS AND MOODY'S PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND CREDIT RATINGS AND MOODY'S PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. NEITHER CREDIT RATINGS NOR MOODY'S PUBLICATIONS COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MOODY'S ISSUES ITS CREDIT RATINGS AND PUBLISHES MOODY'S PUBLICATIONS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING, OR SALE.

 


ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY LAW, INCLUDING BUT NOT LIMITED TO, COPYRIGHT LAW, AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT MOODY'S PRIOR WRITTEN CONSENT. All information contained herein is obtained by MOODY'S from sources believed by it to be accurate and reliable. Because of the possibility of human or mechanical error as well as other factors, however, all information contained herein is provided "AS IS" without warranty of any kind. MOODY'S adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources Moody's considers to be reliable, including, when appropriate, independent third-party sources. However, MOODY'S is not an auditor and cannot in every instance independently verify or validate information received in the rating process. Under no circumstances shall MOODY'S have any liability to any person or entity for (a) any loss or damage in whole or in part caused by, resulting from, or relating to, any error (negligent or otherwise) or other circumstance or contingency within or outside the control of MOODY'S or any of its directors, officers, employees or agents in connection with the procurement, collection, compilation, analysis, interpretation, communication, publication or delivery of any such information, or (b) any direct, indirect, special, consequential, compensatory or incidental damages whatsoever (including without limitation, lost profits), even if MOODY'S is advised in advance of the possibility of such damages, resulting from the use of or inability to use, any such information. The ratings, financial reporting analysis, projections, and other observations, if any, constituting part of the information contained herein are, and must be construed solely as, statements of opinion and not statements of fact or recommendations to purchase, sell or hold any securities. Each user of the information contained herein must make its own study and evaluation of each security it may consider purchasing, holding or selling. NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY SUCH RATING OR OTHER OPINION OR INFORMATION IS GIVEN OR MADE BY MOODY'S IN ANY FORM OR MANNER WHATSOEVER.

 


MIS, a wholly-owned credit rating agency subsidiary of Moody's Corporation ("MCO"), hereby discloses that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MIS have, prior to assignment of any rating, agreed to pay to MIS for appraisal and rating services rendered by it fees ranging from $1,500 to approximately $2,500,000. MCO and MIS also maintain policies and procedures to address the independence of MIS's ratings and rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold ratings from MIS and have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is posted annually at www.moodys.com under the heading "Shareholder Relations — Corporate Governance — Director and Shareholder Affiliation Policy."

 


For Australia only: Any publication into Australia of this document is pursuant to the Australian Financial Services License of MOODY'S affiliate, Moody's Investors Service Pty Limited ABN 61 003 399 657AFSL 336969 and/or Moody's Analytics Australia Pty Ltd ABN 94 105 136 972 AFSL 383569 (as applicable). This document is intended to be provided only to "wholesale clients" within the meaning of section 761G of the Corporations Act 2001. By continuing to access this document from within Australia, you represent to MOODY'S that you are, or are accessing the document as a representative of, a "wholesale client" and that neither you nor the entity you represent will directly or indirectly disseminate this document or its contents to "retail clients" within the meaning of section 761G of the Corporations Act 2001. MOODY'S credit rating is an opinion as to the creditworthiness of a debt obligation of the issuer, not on the equity securities of the issuer or any form of security that is available to retail clients. It would be dangerous for retail clients to make any investment decision based on MOODY'S credit rating. If in doubt you should contact your financial or other professional adviser.
© 2013 Moody's Investors Service, Inc., Moody’s Analytics, Inc. and/or their affiliates and licensors. All rights reserved.
Regional Sites: