MOODY'S UPGRADES MERITA BANK'S LONG-TERM DEPOSIT RATING TO A1 FROM A2 AND ITS FINANCIAL STRENGTH RATING TO C FROM D+ WITH A POSITIVE OUTLOOK
Moody's Investors Service upgraded the long-term deposit and debt ratings of Merita Bank to A1 from A2, and the bank financial strength rating to C with a positive outlook from D+. The subordinated debt rating was upgraded to A2 from A3, and the junior subordinated debt rating was confirmed at A3. The financial strength rating had been on review for possible upgrade since January 1999. Moody's said that the upgrades reflect the significant and sustainable improvement in Merita Bank's financial fundamentals and the fact that a high degree of integration into the MeritaNordbanken group has now been achieved.
In recent years Merita Bank has achieved a steady improvement in its financial fundamentals, particularly asset quality. According to Moody's the plans implemented last December to accelerate the disposal of the bank's property portfolio were important in this respect. At that time the value of the portfolio was written down by FIM 3.5 billion. Moody's said that the positive outlook for the financial strength rating reflects the potential for ongoing development of commercial synergies within the MeritaNordbanken group, which should be of value in assisting Merita Bank to defend its dominant position in the competitive Finnish banking market.
Merita Bank is Finland's largest bank, and in 1998 merged with Nordbanken of Sweden (rated A1/P-1/C+), to create the MeritaNordbanken group, one of the largest banking groups in the Nordic area. Moody's said that it considers that the process of integrating the two banks has so far progressed well, with the two banks now being managed as a single group. Moody's added that an important element in the upgrade, and consequent aligning of the debt and deposit ratings of the two banks, is the expectation that the group is committed to making its full resources available to support either Merita or Nordbanken.
Merita's junior subordinated debt rating was confirmed at A3. This reflects the fact that the rating is based on the intrinsic strength of Merita Bank in the context of the MeritaNordbanken group, and at the A3 level is in line with the junior subordinated debt rating of Nordbanken.
The following ratings were upgraded:
Merita Bank Ltd: long-term deposit to A1 from A2; long-term debt to A1 from A2; subordinated debt to A2 from A3; bank financial strength to C from D+; preferred stock to "a3" from "baa1"
The following rating was confirmed:
Merita Bank Ltd: junior subordinated debt at A3
Merita Bank Ltd is headquartered in Helsinki, Finland. At 31st December 1998 it had total assets of FIM 302 billion (approximately EUR 50.8 billion or USD 52.6 billion)
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