Actions follow the review for downgrade of parents' ratings
London, 21 February 2012 -- Moody's Investors Service today has placed on review for downgrade
the debt and deposit ratings of 21 bank subsidiaries located in Central
and Eastern Europe (CEE) and Commonwealth of Independent States (CIS),
reflecting concerns regarding weakening capacity and/or willingness of
parent banks to provide support to these subsidiaries.
At the same time, Moody's has placed on review for downgrade
the standalone credit assessments of 7 of these bank subsidiaries,
reflecting the potential adverse consequences from weakening creditworthiness
at the parent level on the subsidiaries' financial strength,
given the close linkages between them. Such linkages include the
risk that subsidiaries may face pressure to upstream capital to their
parents or to take more risks in order to increase profits.
Today's announcement follows the placement on review for downgrade
of the affected subsidiaries' parent groups, specifically
11 European banking groups and one US group. These actions are
discussed further in the press releases "Moody's Reviews Ratings for European
Banks" and "Moody's Reviews Ratings for Banks and Securities Firms
with Global Capital Markets Operations", both dated February
15, 2012, on moodys.com.
The affected subsidiaries are listed below (in alphabetical order of their
parent groups):
- Bank Millennium (subsidiary of Banco Comercial Portugues)
- Bank Handlowy w Warszawie S.A. (subsidiary of Citigoup)
- Forum Bank (subsidiary of Commerzbank)
- Banca Comerciala Romana, Ceska Sporitelna and Erste Bank
Hungary (subsidiaries of Erste Group Bank)
- ING Bank Eurasia and ING Bank Slaski (subsidiaries of ING Bank)
- Banka Intesa (Russia) and Vseobecna uverova banka (subsidiaries
of Intesa Sanpaolo)
- Ceskoslovenska Obchodni Banka (Czech Republic) and Ceskoslovenska
Obchodna Banka (Slovakia) (subsidiaries of KBC Bank)
- Natixis Bank (ZAO) (subsidiary of Natixis)
- Bank Gospodarki Zywnosciowej (subsidiary of Rabobank)
- Raiffeisenbank (Bulgaria) EAD, Raiffeisen Bank SA,
ZAO Raiffeisenbank, Raiffeisen Bank Aval, Raiffeisen Leasing
Aval and Tatra Banka (subsidiaries of Raiffeisen Bank International)
- Komercni Banka (subsidiary of Société Générale)
The bank ratings affected by today's announcement are listed at
the end of this press release.
RATINGS RATIONALE
Moody's bank credit analysis takes into account assumptions about
the capacity and willingness of parent banks to support their subsidiaries
if required. Under Moody's joint-default analysis
methodology, such support assumptions can lead to a subsidiary's
debt and deposit ratings being positioned above its standalone credit
assessment. Weakening financial strength of parent groups can reduce
the benefit from parental support, and exert downward rating pressure
on a subsidiary's debt and deposit ratings. Furthermore,
Moody's also has increasing concerns regarding the willingness of
European parent banking groups to extend support in the current environment.
FOCUS OF THE REVIEW -- DEBT AND DEPOSIT RATINGS
In conjunction with the conclusion of the reviews of the parent group
ratings, the reviews for downgrade of the subsidiaries' deposit
and debt ratings will focus on two key factors:
(1) WEAKENING OF CAPACITY OF PARENT BANKS TO PROVIDE SUPPORT
The operating environment for banking groups in Europe has deteriorated
significantly in recent months, driven by (i) the adverse and prolonged
impact of the euro area crisis, which makes the operating environment
very difficult for European banks; (ii) the deteriorating creditworthiness
of euro area sovereigns; and (iii) longer-term, the
substantial challenges faced by banks and securities firms with significant
capital market activities. These drivers are triggering deterioration
in the credit profiles of parent banks, thereby affecting their
financial capacity, including capital and funding resources,
to support their subsidiaries.
Accordingly, the reviews will assess the effects of any reduction
in the capacity of parent groups to support their subsidiaries,
as captured by any lowering of parent groups' standalone credit
assessments.
In the case of Bank Handlowy, a subsidiary of the US' Citigroup,
Moody's concern about the parent's credit strength primarily
reflects the third aforementioned driver, namely the difficulties
for financial institutions with global capital markets activities.
These firms face more fragile funding conditions, wider credit spreads
and increased regulatory burdens. These adverse credit drivers,
together with inherent vulnerabilities such as confidence-sensitivity,
interconnectedness, and opacity of risk, have diminished the
longer term profitability and growth prospects of firms with global capital
market operations, in Moody's opinion.
(2) POTENTIAL WEAKENING IN WILLINGESS OF PARENT BANKS TO PROVIDE SUPPORT
The above-listed adverse trends, as well as stricter regulatory
requirements are driving banks to strengthen their capital resources,
including via deleveraging. Such efforts can lead parent banks
to refocus on their core domestic franchises and reduce their willingness
to deploy scarce capital and funding resources to support foreign subsidiaries.
Accordingly, the review will also re-assess any changes in
the willingness or likelihood that European parental groups will provide
support if needed. This part of the review will consider,
on a bank-by-bank basis (i) the increasing pressure on parent
groups to refocus on their core domestic franchises; (ii) any changes
to the medium-term strategic fit of subsidiaries; and (iii)
the potential for a gradual withdrawal from the markets in which the respective
subsidiaries operate, given the Europe-wide scarcity of capital
resources.
The concerns regarding potential weakening in willingness of European
parent banks to provide support are described in more detail in Moody's
Comment, "CEE and CIS Banks: Pressure on Euro Area Banks
Could Lead to Diminishing Parental Support for Local Subsidiaries",
published on 16 December 2012.
The reviews of subsidiaries' deposit and debt ratings will assess
the effects of these factors on each affected subsidiary, taking
into consideration its positioning and long-term strategic value
within the parent group and the financial standing of each parent.
The reviews of the subsidiaries will be concluded following the conclusion
of the reviews on their respective parent groups.
RATINGS RATIONALE -- STANDALONE CREDIT ASSESSMENTS
In addition to the reviews on deposit and debt ratings for all 21 subsidiaries,
the standalone credit assessments of 7 of these have also been placed
on review for downgrade, reflecting the potential adverse consequences
from weakening creditworthiness at the parent level on the subsidiaries'
financial strength. The affected 7 banks are: Banca Comerciala
Romana, Bank Millennium, Ceska Sporitelna, Ceskoslovenska
Obchodni Banka (Czech Republic), Komercni Banka, Raiffeisen
Bank SA and Tatra Banka.
FOCUS OF THE REVIEW -- STANDALONE CREDIT ASSESSMENTS
For these banks, the reviews will also assess increasing concerns
regarding how pressures on parent groups may affect subsidiaries'
standalone credit profiles through their close financial, branding
and managerial linkages. Such linkages further include risks that
subsidiaries may face pressure from their parents to upstream capital
to them or to take more risks to grow profits. Moody's will
assess the positioning of each subsidiary's standalone credit assessment
relative to its parent's standalone profile, taking into account
(i) funding dependence; (ii) profitability; (iii) exposure to
the parent; (iv) regulatory barriers to control the distribution
of capital resources from the subsidiary to the parent and (v) idiosyncratic
challenges in local markets.
WHAT COULD MOVE THE RATINGS UP/DOWN
For the reviews of subsidiaries' deposit and debt ratings,
the most important drivers are the weakening capacity of parent banks
to provide support to subsidiaries and the risk of declining willingness
to offer such support. For the reviews of subsidiaries' standalone
credit assessments, the most important drivers are how declining
financial strength of the parent groups may affect subsidiaries'
standalone credit profiles via close financial, branding and managerial
linkages, as well as the risk of pressure on subsidiaries to upstream
capital to their parents or to take more risks in order to increase profits.
Moody's believes there is little likelihood of any upward rating
momentum for the subsidiaries covered by today's announcement,
unless there was a material, sustained improvement in the European
operating environment.
The following ratings are affected:
Bank Millennium (subsidiary of Banco Comercial Portugues)
- Long-term local and foreign currency deposit rating of
Baa3, placed on review for downgrade from negative outlook
- Short-term local and foreign currency deposit rating of
Prime-3, placed on review for downgrade
- Standalone BFSR (bank financial strength rating) of D (mapping
to Ba2), placed on review for downgrade from stable outlook
Bank Handlowy w Warszawie S.A. (subsidiary of Citigoup)
- Long-term local and foreign currency deposit rating of
Baa1, placed on review for downgrade from negative outlook
- Short-term local and foreign currency deposit rating of
Prime-2, placed on review for downgrade
- Standalone BFSR of D+ (mapping to Baa3), negative
outlook, unchanged
Forum Bank (subsidiary of Commerzbank AG):
- Long-term local currency deposit rating of B1, placed
on review for downgrade from negative outlook
- Long-term foreign currency deposit rating of B3,
negative outlook, unchanged
- Long-term national scale bank deposits rating of Aa3.ua,
placed on review for downgrade
- Standalone BFSR of E+ (mapping to B3), negative outlook,
unchanged
Banca Comerciala Romana (subsidiary of Erste Group Bank):
- Long-term local currency deposit rating of Baa2,
and foreign currency deposit rating of Baa3, placed on review for
downgrade from stable outlook
- Short-term local currency deposit rating of Prime-2,
and foreign currency deposit rating of Prime-3, placed on
review for downgrade
- Standalone BFSR of D (mapping to Ba2), placed on review
for downgrade from stable outlook
Ceska Sporitelna (subsidiary of Erste Group Bank):
- Long-term local and foreign currency deposit rating of
A1, placed on review for downgrade from negative outlook
- Short-term local and foreign currency deposit rating of
Prime-1, placed on review for downgrade
- Standalone BFSR of C (mapping to A3), placed on review
for downgrade from negative outlook
Erste Bank Hungary (subsidiary of Erste Group Bank):
- Long-term local and foreign currency deposit ratings of
Ba3, placed on review for downgrade from negative outlook
- Standalone BFSR of E+ (mapping to B2), negative outlook,
unchanged
ING Bank Eurasia (subsidiary of ING Bank):
- Long-term local and foreign currency deposit rating of
Baa1, placed on review for downgrade from negative outlook
- Short-term local and foreign currency deposit rating of
Prime-2, placed on review for downgrade
- Senior unsecured rating of Baa1, placed on review for downgrade
from negative outlook
- Standalone BFSR of D (mapping to Ba2), stable outlook,
unchanged
ING Bank Slaski (subsidiary of ING Bank):
- Long-term local and foreign currency deposit rating of
A2, placed on review for downgrade from negative outlook
- Short-term local and foreign currency deposit rating of
Prime-1, placed on review for downgrade
- Standalone BFSR of D+ (mapping to Baa3), stable outlook,
unchanged
Banca Intesa (Russia) (subsidiary of Intesa Sanpaolo):
- Long-term- local and foreign currency deposit ratings
of Baa3, placed on review for downgrade from negative outlook
- Short-term local and foreign currency deposit rating of
Prime-3, placed on review for downgrade
- Standalone BFSR of D- (mapping to Ba3), stable outlook,
unchanged
Vseobecna uverova banka (subsidiary of Intesa Sanpaolo):
- Long-term local and foreign currency deposit rating of
A2, placed on review for downgrade from negative outlook
- Short-term local and foreign currency deposit rating of
Prime-1, placed on review for downgrade
- Standalone BFSR of C- (mapping to Baa2), stable
outlook, unchanged
Ceskoslovenska Obchodni Banka (Czech Republic) (subsidiary of KBC Bank)
- Long-term local and foreign currency deposit rating of
A1, placed on review for downgrade from negative outlook
- Short-term local and foreign currency deposit rating of
Prime-1, placed on review for downgrade
- Standalone BFSR of C (mapping to A3), placed on review
for downgrade from negative outlook
Ceskoslovenska Obchodna Banka (Slovakia) (subsidiary of KBC Bank)
- Long-term local and foreign currency deposit rating of
Baa2, placed on review for downgrade from stable outlook
- Short-term local and foreign currency deposit rating of
Prime-2, placed on review for downgrade
- Standalone BFSR of D (mapping to Ba2), stable outlook,
unchanged
Natixis Bank (ZAO) (subsidiary of Natixis):
- Long-term local and foreign currency deposit rating of
Ba2, placed on review for downgrade from stable outlook
- Standalone BFSR of E+ (mapping to B1), stable outlook,
unchanged
Bank Gospodarki Zywnosciowej (subsidiaries of Rabobank):
- Long-term local and foreign currency deposit rating of
Baa1, placed on review for downgrade from negative outlook
- Short-term local and foreign currency deposit rating of
Prime-2, placed on review for downgrade
- Standalone BFSR of D (mapping to Ba2), stable outlook,
unchanged
Raiffeisenbank (Bulgaria) EAD (subsidiary of Raiffeisen Bank International
AG):
- Long--term local and foreign currency deposit rating of
Baa3, placed on review for downgrade from stable outlook
- Short-term local and foreign currency deposit rating of
Prime-3, placed on review for downgrade
- Standalone BFSR of D+ (mapping to Ba1), negative outlook,
unchanged
Raiffeisen Bank SA (subsidiary of Raiffeisen Bank International AG):
- Long--term local currency deposit rating of Baa3,
placed on review for downgrade from positive outlook
- Long-term foreign currency deposit rating of Baa3,
placed on review for downgrade from stable outlook
- Short-term local and foreign currency deposit rating of
Prime-3, placed on review for downgrade
- Standalone BFSR of D (mapping to Ba2), placed on review
for downgrade from stable outlook
ZAO Raiffeisenbank (subsidiary of Raiffeisen Bank International AG):
- Long-term local and foreign currency deposit rating of
Baa3, placed on review for downgrade from positive outlook
- Local currency senior unsecured debt rating of Baa3, placed
on review for downgrade from positive outlook
- Foreign currency senior unsecured debt rating of (P)Baa3,
placed on review for downgrade from positive outlook
- Short-term local and foreign currency deposit rating of
Prime-3, placed on review for downgrade
- Foreign currency senior unsecured debt rating of (P)Prime-3,
placed on review for downgrade
- Foreign currency subordinated debt rating of (P)Ba1, placed
on review for downgrade from positive outlook
- Standalone BFSR of D+ (mapping to Ba1), stable outlook,
unchanged
Raiffeisen Bank Aval (subsidiary of Raiffeisen Bank International AG):
- Long--term local currency deposit ratings of Ba1,
placed on review for downgrade from stable outlook
- Local currency senior unsecured rating of Ba1, placed on
review for downgrade from stable outlook
- Long-term foreign currency deposit ratings of B3,
negative outlook, unchanged
- Long-term deposit national scale rating of Aa1.ua,
unchanged
- Senior unsecured national scale rating of Aa1.ua,
unchanged
- Standalone BFSR of D- (mapping to Ba3), stable outlook,
unchanged
Raiffeisen Leasing Aval (subsidiary of Raiffeisen Bank International AG):
- Long--term national scale issuer rating of Aa1.ua,
placed on review for downgrade
- Long -term national scale senior unsecured rating of Aa1.ua,
placed on review for downgrade
Tatra Banka (subsidiary of Raiffeisen Bank International AG):
- Long-term local and foreign currency deposit rating of
A2, placed on review for downgrade from negative outlook
- Short-term local and foreign currency deposit rating of
Prime-1, placed on review for downgrade
- Standalone BFSR of C- (mapping to Baa2), placed
on review for downgrade from negative outlook
Komercni Banka (subsidiary of Société Générale):
- Long-term local and foreign currency deposit rating of
A2, placed on review for downgrade from negative outlook
- Short-term local and foreign currency deposit rating of
Prime-1, placed on review for downgrade
- Standalone BFSR of C (mapping to A3), placed on review
for downgrade from negative outlook
The principal methodologies used in rating Bank Millenium, Bank
Handlowy w Warszawie S.A, Forum Bank, Banca Comerciala
Romana, Ceska Sporitelna, Erste Bank Hungary, ING Bank
Eurasia, ING Bank Slaski, Banca Intesa (Russia), Vseobecna
uverova banka, Ceskoslovenska Obchodni Banka (Czech Republic),
Ceskoslovenska Obchodna Banka (Slovakia), Natixis Bank (ZAO),
Bank Gospodarki Zywnosciowej, Raiffeisenbank (Bulgaria) EAD,
Raiffeisen Bank SA, Raiffeisen Bank Aval and Raiffeisen Leasing
Aval, Tatra Banka and Komercni Bank were Bank Financial Strength
Ratings: Global Methodology published in February 2007 and Incorporation
of Joint-Default Analysis into Moody's Bank Ratings: A Refined
Methodology published in March 2007.
The principal methodologies used in rating ZAO Raiffeisenbank were Bank
Financial Strength Ratings: Global Methodology published in February
2007 and Incorporation of Joint-Default Analysis into Moody's Bank
Ratings: A Refined Methodology published in March 2007, and
Moody's Guidelines for Rating Bank Hybrid Securities and Subordinated
Debt published in November 2009.
The ratings of Forum Bank, Raiffeisen Bank Aval and Raiffeisen Leasing
Aval are Moody's National Scale Ratings (NSRs) which are intended as relative
measures of creditworthiness among debt issues and issuers within a country,
enabling market participants to better differentiate relative risks.
NSRs differ from Moody's global scale ratings in that they are not globally
comparable with the full universe of Moody's rated entities, but
only with NSRs for other rated debt issues and issuers within the same
country. NSRs are designated by a ".nn" country
modifier signifying the relevant country, as in ".mx"
for Mexico. For further information on Moody's approach to national
scale ratings, please refer to Moody's Rating Implementation Guidance
published in March 2011 entitled "Mapping Moody's National Scale
Ratings to Global Scale Ratings".
REGULATORY DISCLOSURES
For ratings issued on a program, series or category/class of debt,
this announcement provides relevant 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 relevant 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 relevant 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.
The ratings of ING Bank Slaski were initiated by Moody's and were not
requested by these rated entities.
ING Bank Slaski or its agent(s) participated in the rating process.
This rated entity or its agent(s) provided Moody's access to the
books, records and other relevant internal documents of the rated
entity.
The ratings have been disclosed to the rated entities or their designated
agents and issued with no amendment resulting from that disclosure.
Information sources used to prepare the ratings for Bank Millenium,
Bank Handlowy w Warszawie S.A, Forum Bank, Banca Comerciala
Romana, Ceska Sporitelna, Erste Bank Hungary, ING Bank
Eurasia, Vseobecna uverova banka, Ceskoslovenska Obchodni
Banka, Ceskoslovenska Obchodna Banka (Slovakia), Natixis Bank
(ZAO), Bank Gospodarki Zywnosciowej, Raiffeisenbank (Bulgaria)
EAD, Raiffeisen Bank SA, ZAO Raiffeisenbank, Raiffeisen
Bank Aval, Raiffeisen Leasing Aval, Tatra Banka and Komercni
Banka are the following: parties involved in the ratings,
public information, and confidential and proprietary Moody's
Investors Service information.
Information sources used to prepare the ratings for Banca Intesa (Russia)
are the following: parties involved in the ratings, parties
not involved in the ratings, public information, and confidential
and proprietary Moody's Investors Service information.
Information sources used to prepare the ratings for ING Bank Slaski are
the following: public information.
Moody's considers the quality of information available on the rated
entities, obligations or credits satisfactory for the purposes of
issuing these reviews.
Moody's adopts all necessary measures so that the information it
uses in assigning the ratings 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.
Moody's Investors Service may have provided Ancillary or Other Permissible
Service(s) to the rated entities or their related third parties within
the two years preceding the credit rating action. Please see the
special report "Ancillary or other permissible services provided
to entities rated by MIS's EU credit rating agencies" on the
ratings disclosure page on our website www.moodys.com for
further information.
Please see the ratings disclosure page on www.moodys.com
for general disclosure on potential conflicts of interests.
Please see the ratings disclosure page on www.moodys.com
for information on (A) MCO's major shareholders (above 5%)
and for (B) further information regarding certain affiliations that may
exist between directors of MCO and rated entities as well as (C) the names
of entities that hold ratings from MIS that have also publicly reported
to the SEC an ownership interest in MCO of more than 5%.
A member of the board of directors of this rated entity may also be a
member of the board of directors of a shareholder of Moody's Corporation;
however, Moody's has not independently verified this matter.
Please see Moody's Rating Symbols and Definitions on the Rating
Process page on www.moodys.com for further information on
the meaning of each rating category and the definition of default and
recovery.
Please see for each issuer the ratings tab on the issuer/entity page on
www.moodys.com for the last rating action and the rating
history. The date on which some ratings were first released goes
back to a time before Moody's ratings were fully digitized and accurate
data may not be available. Consequently, Moody's provides
a date that it believes is the most reliable and accurate based on the
information that is available to it. Please see the ratings disclosure
page on our website www.moodys.com for further information.
The below contact information is provided for information purposes only.
Please see the issuer page on www.moodys.com for Moody's
regulatory disclosure of the name of the lead analyst and the office that
has issued the credit rating.
The person who approved Bank Millennium, Bank Handlowy w Warszawie
S.A, Forum Bank, Banca Comerciala Romana, Ceska
Sporitelna, Erste Bank Hungary, ING Bank Eurasia, ING
Bank Slaski, Banka Intesa (Russia), Vseobecna uverova banka,
Ceskoslovenska Obchodni Banka (Czech Republic), Ceskoslovenska Obchodna
Banka (Slovakia), Natixis Bank (ZAO), Bank Gospodarki Zywnosciowej,
Raiffeisenbank (Bulgaria) EAD, Raiffeisen Bank SA, ZAO Raiffeisenbank,
Raiffeisen Bank Aval, Raiffeisen Leasing Aval, Tatra Banka
and Komercni Banka is Yves Lemay, MD -- Financial Institutions
Group, JOURNALISTS: 44 20 7772 5456 SUBSCRIBERS: 44
20 7772 5454.
The person who approved Komercni Banka is Simon Harris, MD --
Financial Institutions Group, JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454.
The relevant Releasing Office for each rating is identified under the
Debt/Tranche List section on the Ratings tab of each issuer/entity page
on moodys.com
Irakli Pipia
Vice President - Senior Analyst
Financial Institutions Group
Moody's Investors Service Ltd.
One Canada Square
Canary Wharf
London E14 5FA
United Kingdom
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454
Yves Lemay
MD - Banking
Financial Institutions Group
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454
Releasing Office:
Moody's Investors Service Ltd.
One Canada Square
Canary Wharf
London E14 5FA
United Kingdom
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454
Moody's reviews ratings of bank subsidiaries in CEE and CIS for downgrade
