MOODY'S CHANGES TO NEGATIVE FROM STABLE THE OUTLOOK ON HVB'S Aa3 LONG-TERM RATINGS AND B FINANCIAL STRENGTH RATING
London, November 28, 2001 -- Moody's Investors Service has changed to negative from stable the outlook on the Aa3 long-term debt and deposit ratings of Bayerische Hypo- und Vereinsbank AG (HVB) and on its B financial strength rating. The outlook change also applies to various of the ratings of HVB's subsidiaries (as listed below). It does not apply to the rating outlook for HVB's and HVB's Real Estate Bank's Public-sector Pfandbriefe, which remains stable.
Moody's said that, the outlook change addresses its concerns that HVB's continuing restructuring of its domestic operations may not lead to a significant improvement in the bank's profitability in the short term, especially in the context of an economic slowdown in Germany. HVB's profitability is modest in comparison with other large European banks, even on a risk-adjusted basis. However, the bank's current ratings continue to incorporate the expectation that its solid franchises in retail and mortgage banking in Germany and Austria will be translated into stronger financial fundamentals, the rating agency added.
In this context, the full benefits of the integration of Bank Austria and the consolidation of those of its operations which were transferred to HVB may be more challenging than expected, Moody's said. HVB Group's ambitious expansion plans for Central and Eastern Europe are facing some difficulties. This is especially so in Poland where Moody's today downgraded the financial strength rating of Bank Austria's subsidiary Bank Przemyslowo-Handlowy SA (rated Baa1/P-2) to D from D+. BPH will be Poland's third largest bank once it has merged with Bank Austria's Polish subsidiary Powszechny Bank Kredytowy S.A. (PBK, not rated).
Nonetheless, HVB reserves one of the best positioned franchises in retail banking in Germany, Austria and in Central and Eastern Europe, Moody's noted.
The outlook on the following ratings was changed to negative from stable:
- Bayerische Hypo- und Vereinsbank AG -- the Aa3 long-term deposit and debt ratings; the B financial strength rating; the Aaa Mortgage Pfandbriefe ratings.
- Bank Austria AG -- the Aa3 deposit ratings and B- financial strength rating.
- Creditanstalt AG -- the Aa3 despoit ratings and B- financial strength rating.
- Westfaelische Hypothekenbank AG -- the A1 long-term deposit and debt ratings; Aaa/Aa1 Public sector/Mortgage Pfandbrief ratings.
- Wuerttembergische Hypothekenbank AG -- the A1 long-term deposit and debt ratings; Aaa/Aa1 Public sector/Mortgage Pfandbrief ratings.
- HVB Real Estate Bank AG -- the Aa3 long-term debt and deposit ratings; Aaa Mortgage Pfandbriefe ratings.
- HypoVereins Finance NV -- the guaranteed Aa3 long-term debt rating;.
- HypoVereinsbank Luxembourg SA -- the A1 long-term deposit and debt ratings.
- HypoVereinsbank Ireland plc -- the A1 long-term deposit rating
- HypoVereinsbank Funding Trusts I-VII: the A2 preferred stock ratings.
Headquartered in Munich, Bayerische Hypo- und Vereinsbank is Germany's second largest banking group. As of 30 September 2001 the group had consolidated total assets of EUR724.6 billion.
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