January 9 (SeeNews) - Standard & Poor's said it has placed its 'B' long-term counterparty credit rating on United Bulgarian Bank (UBB) on CreditWatch with positive implications as a result of the agreement for the bank's acquisition by Belgium-based KBC Group.
At the same time, S&P raised the short-term counterparty credit rating on UBB to 'B' from 'C to reflect the UBB's improved liquidity, the rating agency said in a statement last week.
S&P expects to resolve the CreditWatch when the transaction closes.
It added that the UBB rating could be potentially raised by several notches.
S&P also said in the statement:
"The CreditWatch placement follows Belgium-based KBC Group's announcement that it had reached an agreement with the National Bank of Greece, UBB's owner, to acquire 99.9% ownership of UBB. The transaction is subject to regulatory approval from the Bulgarian National Bank and the Financial Supervision Commission of the Republic of Bulgaria, as well as consent from the National Bank of Belgium, the European Central Bank, and anti-trust authorities.
We believe that acquiring UBB is consistent with KBC's international bancassurance strategy and its view of Bulgaria as a core market with good growth potential.
We raised our short-term rating on UBB to 'B' from 'C' because its near-term liquidity has improved following the reversal of deposit outflows in 2016. We expect to resolve the CreditWatch when the transaction closes.
We could raise the rating on UBB, potentially by several notches, after analyzing the transaction's impact on the bank's stand-alone credit profile and the likelihood of UBB receiving group support from KBC.
We expect the transaction will close in the second quarter of 2017.
Should KBC not complete its acquisition of UBB, we could affirm the ratings, all other factors remaining unchanged."