Actions follow the downgrade of the parent bank's ratings
London, 15 May 2012 -- Moody's Investors Service has today downgraded by one notch the long-term
deposit ratings of UniCredit Bank Slovakia a.s. to Baa2,
with a stable outlook, from Baa1, and the long-term
debt and deposit ratings of ATF Bank (Kazakhstan) to B1, with a
stable outlook, from Ba3.
These rating actions primarily reflect the reduced capacity of the parent
banking group (UniCredit SpA) to provide capital and funding support,
if needed, to its subsidiaries, as indicated by the recent
one-notch downgrade on of UniCredit SpA to A3 negative; C-/baa2
negative. For further details see press release http://www.moodys.com/research/Moodys-downgrades-Italian-banks-outlooks-remain-negative--PR_244732
published on 14 May 2012.
At the same time, Moody's confirmed UniCredit's Polish
subsidiary Pekao SA's A2 deposit ratings with a negative outlook
and standalone bank financial strength rating (BFSR) of C- (mapping
to baa1 on the long-term scale) with a stable outlook.
Today's rating actions on these subsidiaries conclude the reviews initiated
on 16 November 2011, when the ratings of these subsidiaries were
placed on review for downgrade, following a similar rating action
on UniCredit SpA.
Full list of affected ratings is provided at the end of the press release.
For additional information on bank ratings, please refer to the
webpage containing Moody's related announcements http://www.moodys.com/bankratings2012.
RATINGS RATIONALE FOR SLOVAK AND KAZAKH SUBSIDIARIES
The one-notch downgrades of the Slovak and Kazakh subsidiaries
of UniCredit were driven primarily by the weakening capacity and,
to a lesser extent, willingness of the parent to provide timely
capital and funding support to its subsidiaries, if needed.
--- WEAKENING CAPACITY OF THE PARENT BANK TO PROVIDE
SUPPORT
Moody's says that the lowering of UniCredit's standalone credit
assessment to baa2, as announced yesterday, reflects (i) weakening
profitability and asset quality; (ii) restricted access to market
funding; and (iii) the increasingly difficult operating environment
that the group faces, particularly in the Italian market,
where conditions have deteriorated significantly since H1 2011.
Under Moody's Joint Default Analysis methodology, the long-term
ratings of the Slovak and Kazakh subsidiaries incorporate uplift from
parental support assumptions; the one-notch lowering of UniCredit's
standalone credit strength results in a corresponding rating downgrade
for the subsidiaries.
--- SHIFTING STRATEGIC PRIORITIES ALSO AFFECT WILLINGESS
TO PROVIDE SUPPORT
The rating action on the Kazakh and Slovak subsidiaries also takes into
account, albeit to a lesser extent, Moody's view that
UniCredit SpA's willingness to extend financial support to some
peripheral international subsidiaries has weakened.
Many Western European banks, including UniCredit, are facing
difficult choices regarding the allocation of their scarce capital and
funding resources. This has implications for those international
subsidiaries whose medium-term profitability potential has been
impaired by the ongoing financial crisis and/or are located in the countries
that have reduced strategic significance for UniCredit group. Accordingly,
as the parent group aims to refocus on its core operations, Moody's
considers that UniCredit's willingness to provide capital and funding
resources to these subsidiaries has weakened compared to the pre-crisis
period.
ATF BANK -- WHAT COULD MOVE THE RATINGS UP/DOWN
In the short-term, ATF Bank's ratings are unlikely
to be upgraded as it has been a consistently loss-making for the
past few years, requiring a parental guarantee for over 40%
of its loans. In the medium-term, a sustainable improvement
in the bank's earnings and reductions in loan-loss provisions,
leading to increases in net income and capital, could exert upward
pressure on the ratings. Conversely, a further material weakening
of ATF Bank's earnings generation, further eroding its capital
and franchise, could lead to a downgrade of its ratings.
In addition, further significant downward pressure on UniCredit's
ratings could impact ATF's ratings.
UNICREDIT BANK SLOVAKIA -- WHAT COULD CHANGE THE RATINGS
UP/DOWN
Currently, UniCredit Bank Slovakia's ratings reflect its high
borrower concentration, including exposure to commercial real-estate
and project finance, and its weakening asset quality, counterbalanced
by its solid franchise in the Slovak market relative to its peers and
its adequate capitalisation levels.
In the medium-term a sustained reduction in borrower concentration
and improvement in asset quality could exert upward pressure on the bank's
ratings. Conversely, further deterioration in the bank's
financial fundamentals, particularly related to asset quality,
liquidity and capitalisation, could exert downward pressure on the
ratings. In addition, further significant downward pressure
on UniCredit's ratings could impact UniCredit Bank Slovakia's
ratings.
--- CONFIRMATION OF PEKAO'S RATINGS REFLECTS
STANDALONE RESILIENCE
Pekao's ratings were originally placed on review over concerns regarding
how the challenges facing the parent group could negatively impact the
subsidiary's credit profile. The confirmation of Pekao's
ratings reflects Moody's view of the Polish subsidiary's relatively
independent franchise from that of the parent, no reliance on parental
funding, strong standalone financial fundamentals, and stringent
regulatory controls on dividend distributions. These considerations
underpin Moody's view that the bank's credit-profile
is partly insulated from the pressures experienced by its parent and results
in Pekao's standalone credit strength maintained at baa1,
one notch higher than the parent's standalone strength of baa2.
The confirmation of Pekao's long-term deposit rating of A2
results from the maintenance of a two-notch uplift from Moody's
assessment of systemic support assumptions, given Pekao's
systemic importance as the second-largest franchise in Poland.
--- FACTORS THAT INSULATE PEKAO (POLAND) FROM THE
PARENT'S CREDIT RISKS
The following factors underpin Moody's view that the Polish subsidiary
is currently insulated from the credit pressures affecting its Italian
parent:
(i) Although Pekao's is majority owned (59%) by UniCredit,
the consistency and transparency of Pekao's strategy is supported by active
minority shareholders and quarterly public disclosures, due to its
presence on the Warsaw stock exchange. Brand association with UniCredit
is relatively low and the quality of Pekao's customer base is not
directly correlated with that of the group. This supports Moody's
view of the relative independence of Pekao's franchise from that
of the parent group.
(ii) Pekao has remained one of the stronger performing banks amongst its
Polish peer group during the crisis, with a strong capital base
supporting its franchise and growth. Moody's does not see a material
risk of Pekao's capital base being depleted by dividend transfers
to the parent. Moreover, protection of the strong capital
base is supported by the guidelines set by the Polish regulatory authority
(KNF) in 2011 to limit the dividend distributions that Polish banks,
including foreign subsidiaries, can make to their shareholders.
(iii) Pekao remains a fully self-funded institution, with
an independent treasury function and limited non-material exposures
to the parent group.
PEKAO -- WHAT COULD MOVE THE RATINGS UP/DOWN
Given the current negative outlook on Pekao's deposit ratings,
which is aligned with the negative outlook on UniCredit, an upgrade
is unlikely in the near term.
Today's rating actions on Pekao reflect Moody's view of the independence
of the Polish subsidiary's franchise. Nevertheless,
the rating agency also recognises that further deterioration in the parent's
financial fundamentals and downward pressure on the parent ratings could
lead to group-wide spill-over effects that could ultimately
weaken Pekao's franchise strength.
Therefore, notwithstanding the relative independence of the Polish
subsidiary at this stage, further significant downward pressure
on UniCredit's ratings could impact Pekao's standalone and
long-term ratings.
FULL LIST OF RATING ACTIONS
The following ratings were affected today:
..Issuer: ATF Bank
Long-term local- and foreign-currency deposit ratings
to B1 from Ba3, with stable outlook
Foreign currency senior unsecured debt rating to B1 from Ba3, with
stable outlook
Junior subordinate debt rating to B3(hyb) from B2(hyb), with stable
outlook
ATF Capital BV senior unsecured global bonds to B1 from Ba3, with
stable outlook
..Issuer: UniCredit Bank Slovakia
Long-term local- and foreign-currency deposit ratings
to Baa2 from Baa1, with stable outlook
Short-term local- and foreign-currency deposit ratings
of Prime-2 confirmed
..Issuer: Bank Polska Kasa Opieki S.A.
Long-term local- and foreign-currency deposit ratings
of A2 confirmed, with negative outlook
Bank financial strength rating of C- confirmed, with stable
outlook (mapping to baa1)
Short-term local- and foreign-currency deposit ratings
of Prime-1 confirmed
The following ratings were unaffected:
..Issuer: ATF Bank
Bank financial strength rating of E+, with stable outlook (mapping
to b3)
Short-term local- and foreign-currency deposit ratings
of Not Prime
..Issuer: UniCredit Bank Slovakia
Bank financial strength rating of D+, with stable outlook (mapping
to ba1)
The methodologies used in these ratings was Bank Financial Strength Ratings:
Global Methodology published in February 2007 and Incorporation of Joint-Default
Analysis into Moody's Bank Ratings: Global Methodology published
in March 2012. Please see the Credit Policy page on www.moodys.com
for a copy of these methodologies.
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 deposit ratings of rated entity Bank Polska Kasa Opieki S.A.
were initiated by Moody's and were not requested by these rated entities.
Rated entity Bank Polska Kasa Opieki S.A. 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 rating(s) for ATF Bank and Bank
Polska Kasa Opieki S.A. are the following: parties
involved in the ratings, and public information.
Information sources used to prepare the rating(s) for Unicredit Bank Slovakia
and are the following : parties involved in the ratings, public
information, and confidential and proprietary Moody's Investors
Service information.
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 considers the quality of information available on the rated
entities, obligations or credits satisfactory for the purposes of
issuing these ratings.
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
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The below contact information is provided for information purposes only.
Please see the issuer page on www.moodys.com for Moody's
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for information on (A) MCO's major shareholders (above 5%) and
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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
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for the last rating action and the rating history.
The date on which some ratings were first released goes back to a time
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the lead rating analyst and to the Moody's legal entity that has issued
the rating.
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 J Lemay
MD - Banking
Financial Institutions Group
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454
Releasing Office:
Moody's Investors Service Ltd.
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Moody's takes rating actions on subsidiaries of Unicredit SpA in Poland, Slovakia and Kazakhstan
