Frankfurt am Main, May 27, 2019 -- Moody's Investors Service (Moody's) has today assigned Baa2 long-term
and Prime-2 short-term issuer ratings to mBank Hipoteczny
S.A. (MBH), a mortgage bank which is a subsidiary
of one of the largest banks in Poland, mBank S.A.
(mBank; A3 stable, baa3). Concurrently, the rating
agency has assigned the bank A3(cr) long-term and Prime-2(cr)
short-term Counterparty Risk Assessment (CR Assessment) and A3
long-term and Prime-2 short-term Counterparty Risk
Ratings (CRRs). The outlook on the long-term issuer ratings
is stable.
A full list of assigned ratings can be found at the end of this press
release.
RATINGS RATIONALE
MBH's Baa2 issuer ratings are positioned one notch below the rating
level that would have been assigned to mBank's senior unsecured debt in
the absence of a full and irrevocable guarantee obligation of mBank to
stand in for MBH's liabilities. At the same time, the
positioning of the issuer ratings at Baa2 reflects (1) mBank's full ownership
of MBH, as well as its strategic fit and high operational integration
within the group; and (2) mBank's public commitment to maintain the
capital and liquidity of its subsidiary at satisfactory levels,
meeting all regulatory requirements.
MBH provides long-term funding to its parent mBank by issuing mortgage
covered bonds, which under Polish regulations can only be issued
through mortgage banks. This setup is expected to benefit the group
by (1) reducing the maturity mismatch between assets and liabilities;
(2) diversifying its sources of funding and (3) lowering the cost of wholesale
funding.
Moody's sees MBH as a strategic part of the mBank group and a visible
part of its business going forward. mBank, the parent bank,
has a commitment to maintain the capital and liquidity ratios of its subsidiary
at satisfactory levels and within the limits required by relevant banking
regulation. In case of a breach of the relevant regulatory requirements,
the Polish Financial Supervision Authority (PFSA) has the necessary powers
under the Banking Act to command mBank to recapitalise or provide liquidity
to its subsidiary. In case of refusal, it can intervene by
limiting voting rights and dividend payments. Furthermore,
MBH's operations are highly integrated within the group - issued
covered bonds accounted for 6.5% of mBank's total
liabilities and 45.8% of its total issued debt as of December
2018.
The stable outlook on the issuer ratings is driven by the stable outlook
on mBank's ratings.
ASSIGNMENT OF COUNTERPARTY RISK ASSESSMENT
Moody's assigns a CR Assessment of A3(cr)/Prime-2(cr), one
notch below the CR Assessment of its parent, mBank, similarly
to the notching of the issuer ratings.
CR Assessment is an opinion of how counterparty obligations are likely
to be treated if a bank fails and are distinct from debt and deposit ratings
in that they (1) consider only the risk of default rather than the likelihood
of default and the expected financial loss suffered in the event of default;
and (2) apply to counterparty obligations and contractual commitments
rather than debt or deposit instruments. The CR Assessment is an
opinion of the counterparty risk related to a bank's covered bonds,
contractual performance obligations (servicing), derivatives (e.g.,
swaps), letters of credit, guarantees and liquidity facilities.
WHAT COULD MOVE THE RATINGS UP/DOWN
MBH's ratings would experience positive or negative pressure in the event
of changes in the ratings of mBank. Furthermore, Moody's
could reconsider the ratings of MBH in case the relationship between the
subsidiary and its parent changes to an extent that would materially reduce
the level of integration between the two.
LIST OF AFFECTED RATINGS
Issuer: mBank Hipoteczny S.A.
..Assignments:
....Long-term Counterparty Risk Ratings,
assigned A3
....Short-term Counterparty Risk Ratings,
assigned P-2
....Long-term Issuer Ratings,
assigned Baa2 Stable
....Short-term Issuer Ratings,
assigned P-2
....Long-term Counterparty Risk Assessment,
assigned A3(cr)
....Short-term Counterparty Risk Assessment,
assigned P-2(cr)
..Outlook Action:
....Outlook changed to Stable from Rating
Withdrawn
PRINCIPAL METHODOLOGY
The principal methodology used in these ratings was Banks published in
August 2018. Please see the Rating Methodologies 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 credit rating action on the support provider and in relation to
each particular credit 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 credit rating action,
and whose ratings may change as a result of this credit 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.
Regulatory disclosures contained in this press release apply to the credit
rating and, if applicable, the related rating outlook or rating
review.
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.
Armen L. Dallakyan
Vice President - Senior Analyst
Financial Institutions Group
Moody's Deutschland GmbH
An der Welle 5
Frankfurt am Main 60322
Germany
JOURNALISTS: 44 20 7772 5456
Client Service: 44 20 7772 5454
Carola Schuler
MD - Banking
Financial Institutions Group
JOURNALISTS: 44 20 7772 5456
Client Service: 44 20 7772 5454
Releasing Office:
Moody's Deutschland GmbH
An der Welle 5
Frankfurt am Main 60322
Germany
JOURNALISTS: 44 20 7772 5456
Client Service: 44 20 7772 5454