SOFIA (Bulgaria), September 4 (SeeNews) - Standard & Poor's said on Thursday it has raised its long-term counterparty credit rating on Bulgarian American Credit Bank (BACB) to 'BB+' from 'BB' and affirmed a 'B' short-term rating as the outlook was stable.
The rating action follows the acquisition by Allied Irish Banks (AIB) of a 49.99% stake in BACB, which was wrapped up on August 29, the global rating agency said in a statement.
"Our base case scenario assumes that BACB is set to benefit from this transaction in terms of financial flexibility, risk management, and business development," Standard & Poor's credit analyst Annette Ess said in the statement.
The long-term rating on the bank includes a one-notch uplift from its stand-alone credit quality. However, the uplift is limited as the rating agency considers BACB to be a nonstrategic subsidiary of AIB, given its small size, Ess said further.
"The outlook is stable because we expect AIB to help BACB sustain its commercial position, solid capitalization, profitability, and secure wholesale funding," Ess said, adding: "We expect the bank to adequately manage risks emanating from mounting competition; rapid loan growth; and high concentration in the hotel and real estate sectors, which are prone to deterioration."
AIB bought 6,311,100 BACB shares at a price of 67.00 ($49.5/34.3 euro) levs per share from BACB's previous majority sharholder - the Bulgarian-American Enterprise Fund (BAEF). Following the deal BAEF owns 3.89% of the Bulgarian lender.
BACB, which ranked Bulgaria's 17th largest bank in terms of assets at the end of July, reported a net profit of 30.5 million levs for the first half of 2008, up 29.3% on the year.
Shares in BACB, part of blue-chip SOFIX index on the Sofia stock exchange, closed 1.46% lower at 57 levs on Thursday in a volume of just 28 stocks.
(1 euro = 1.95583 Bulgarian levs)
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