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Rating Action:

Moody's assigns Counterparty Risk Ratings to 12 banks in Bulgaria, Cyprus, and Greece

20 Jun 2018

Ratings are assigned following 6 June 2018 update to Moody's Banks rating methodology

Limassol, June 20, 2018 -- Moody's Investors Service has today assigned Counterparty Risk Ratings to 12 rated banks in Bulgaria, Cyprus and Greece.

Moody's Counterparty Risk Ratings (CRR) are opinions of the ability of entities to honor the uncollateralized portion of non-debt counterparty financial liabilities (CRR liabilities) and also reflect the expected financial losses in the event such liabilities are not honored. CRR liabilities typically relate to transactions with unrelated parties. Examples of CRR liabilities include the uncollateralized portion of payables arising from derivatives transactions and the uncollateralized portion of liabilities under sale and repurchase agreements. CRRs are not applicable to funding commitments or other obligations associated with covered bonds, letters of credit, guarantees, servicer and trustee obligations, and other similar obligations that arise from a bank performing its essential operating functions.

A full list of affected ratings is provided towards the end of this press release.

RATINGS RATIONALE

In assigning CRRs to the banks subject to this rating action, Moody's starts with the banks' adjusted Baseline Credit Assessment (BCA) and uses the agency's existing advanced Loss-Given-Failure (LGF) approach that takes into account the level of subordination to CRR liabilities in the bank's balance sheet and assumes a nominal volume of such liabilities. For most of these banks, Moody's considers the likelihood of government support for CRR liabilities to be low, resulting in no rating uplift from their respective adjusted BCAs, considering the current European Union's bank recovery and resolution directive (BRRD) with legal restrictions on many forms of government support. For First Investment Bank in Bulgaria, Moody's considers the likelihood of government support for CRR liabilities to be moderate resulting in one notch of support in the bank's CRR. The moderate government support assumption reflects First Investment Bank's position as the third largest bank and the track record of support.

Although these banks are likely to have more than a nominal volume of CRR liabilities at failure, this has no impact on the ratings of some of these banks because the significant level of subordination below the CRR liabilities already provides the maximum amount of uplift allowed under Moody's rating methodology.

In all cases the CRRs assigned are equal to or higher than the rated banks' senior debt ratings. This reflects Moody's view that secured counterparties to banks typically benefit from greater protections under insolvency laws and bank resolution regimes than do senior unsecured creditors, and that this benefit is likely to extend to the unsecured portion of such secured transactions in most bank resolution regimes. Moody's believes that in many cases regulators will use their discretion to allow a bank in resolution to continue to honor its CRR liabilities or to transfer those liabilities to another party who will honor them, in part because of the greater complexity of bailing in obligations that fluctuate with market prices, and also because the regulator will typically seek to preserve much of the bank's operations as a going concern in order to maximize the value of the bank in resolution, stabilize the bank quickly, and avoid contagion within the banking system. CRR liabilities at these banking groups therefore benefit from the subordination provided by more junior liabilities, with the extent of the uplift of the CRR from the adjusted BCA depending on the amount of subordination.

Cyprus Cooperative Bank's long-term CRR is placed under review, direction uncertain. The review will focus on the outcome of the process launched by the bank, on 19 March, to find investors willing to either subscribe additional capital, or to buy its assets and liabilities.

What Could Change the Rating Up/Down

The CRR may be upgraded if there is a strengthening in banks' operating environment or financial fundamentals in a way that will lead to an upgrade of their adjusted BCA or if Moody's revises upwards its assessment of authorities' willingness to provide support or if Moody's revises upwards its assessment of the government's capacity to provide support, captured by an upgrade in the sovereign ratings or related ceilings.

The CRR may be downgraded if there is a weakening in banks' operating environment or financial fundamentals in a way that will lead to a downgrade of their adjusted BCA or if Moody's revises downwards its assessment of authorities' willingness to provide support or if Moody's revises downwards its assessment of the government's capacity to provide support, captured by a downgrade in the sovereign ratings or related ceilings.

Finally, any change in these institutions' liability structure that may impact Moody's LGF analysis may affect the positioning of the CRR. For example, the CRR may be downgraded if an institution's liability structure changes in a way that negatively affects the amount of subordinated instruments below these CRR liabilities.

The principal methodology used in these ratings was Banks published 6 June 2018. Please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.

LIST OF AFFECTED RATINGS

GREECE

Issuer: Alpha Bank AE

Assignments:

....Long-term Counterparty Risk Rating (Local and Foreign Currency), Assigned Caa1

....Short-term Counterparty Risk Rating (Local and Foreign Currency), Assigned NP

Issuer: Attica Bank S.A.

Assignments:

....Long-term Counterparty Risk Rating (Local and Foreign Currency), Assigned Caa2

....Short-term Counterparty Risk Rating (Local and Foreign Currency), Assigned NP

Issuer: Eurobank Ergasias S.A.

Assignments:

....Long-term Counterparty Risk Rating (Local and Foreign Currency), Assigned Caa1

....Short-term Counterparty Risk Rating (Local and Foreign Currency), Assigned NP

Issuer: National Bank of Greece S.A.

Assignments:

....Long-term Counterparty Risk Rating (Local and Foreign Currency), Assigned Caa1

....Short-term Counterparty Risk Rating (Local and Foreign Currency), Assigned NP

Issuer: Piraeus Bank S.A.

Assignments:

....Long-term Counterparty Risk Rating (Local and Foreign Currency), Assigned Caa1

....Short-term Counterparty Risk Rating (Local and Foreign Currency), Assigned NP

CYPRUS

Issuer: Bank of Cyprus Public Company Limited

Assignments:

....Long-term Counterparty Risk Rating (Local and Foreign Currency), Assigned B2

....Short-term Counterparty Risk Rating (Local and Foreign Currency), Assigned NP

Issuer: Cyprus Cooperative Bank Ltd

Assignments:

....Long-term Counterparty Risk Rating (Local and Foreign Currency), Assigned Caa2, Placed Under Review Direction Uncertain

....Short-term Counterparty Risk Rating (Local and Foreign Currency), Assigned NP

Issuer: Hellenic Bank Public Company Ltd

Assignments:

....Long-term Counterparty Risk Rating (Local and Foreign Currency), Assigned B2

....Short-term Counterparty Risk Rating (Local and Foreign Currency), Assigned NP

Issuer: RCB Bank Ltd.

Assignments:

....Long-term Counterparty Risk Rating (Local and Foreign Currency), Assigned Ba2

....Short-term Counterparty Risk Rating (Local and Foreign Currency), Assigned NP

BULGARIA

Issuer: First Investment Bank AD

Assignments:

....Long-term Counterparty Risk Rating (Local and Foreign Currency), Assigned Ba2

....Short-term Counterparty Risk Rating (Local and Foreign Currency), Assigned NP

Issuer: Municipal Bank AD

Assignments:

....Long-term Counterparty Risk Rating (Local and Foreign Currency), Assigned Ba2

....Short-term Counterparty Risk Rating (Local and Foreign Currency), Assigned NP

Issuer: Raiffeisenbank (Bulgaria) EAD

Assignments:

....Long-term Counterparty Risk Rating (Local and Foreign Currency), Assigned Baa1

....Short-term Counterparty Risk Rating (Local and Foreign Currency), Assigned P-2

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.

Items color coded in purple in this Press Release relate to unsolicited ratings for a rated entity which is non-participating.

The below contact information is provided for information purposes only. Please see the ratings tab of the issuer page at www.moodys.com, for each of the ratings covered, Moody's disclosures on the lead rating analyst and the Moody's legal entity that has issued the ratings.

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.

Nondas Nicolaides
VP - Senior Credit Officer
Financial Institutions Group
Moody's Investors Service Cyprus Ltd.
Porto Bello Building
1, Siafi Street, 3042 Limassol
PO Box 53205
Limassol CY 3301
Cyprus
JOURNALISTS: 44 20 7772 5456
Client Service: 44 20 7772 5454

Sean Marion
MD - Financial Institutions
Financial Institutions Group
JOURNALISTS: 44 20 7772 5456
Client Service: 44 20 7772 5454

Releasing Office:
Moody's Investors Service Cyprus Ltd.
Porto Bello Building
1, Siafi Street, 3042 Limassol
PO Box 53205
Limassol CY 3301
Cyprus
JOURNALISTS: 44 20 7772 5456
Client Service: 44 20 7772 5454

No Related Data.
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