January 9 (SeeNews) - Fitch Ratings said it has placed United Bulgarian Bank's (UBB) foreign currency long and short-term issuer default ratings (IDRs) and support rating on rating watch positive (RWP) after Belgium-based lender KBC unveiled a deal to acquire UBB.
"The rating action follows an announcement by KBC Bank (A-/Positive/a-) on 30 December 2016 that it has agreed to buy a 99.9% stake in UBB from National Bank of Greece (NBG; 'RD')," the rating agency said in a statement last week.
UBB's Viability Rating (VR) and Support Rating Floor are unaffected, Fitch added.
Fitch also said in the statement:
"KEY RATING DRIVERS
IDRS, SUPPORT RATING
The RWP on UBB's IDRs and Support Rating reflects Fitch's view that KBC is likely to have a high propensity to support UBB following the acquisition. This reflects KBC's statement that Bulgaria is one of the four CEE markets (apart from Czech Republic, Hungary and Slovakia) identified as core for KBC. Currently, UBB's ratings are driven by the bank's standalone financial strength, expressed by its 'b+' VR.
RATING SENSITIVITIES
IDRS, SUPPORT RATING
Fitch will resolve the RWP on UBB's ratings once the regulatory approvals for the acquisition are received and the ownership changes. KBC expects the transaction to close in 2Q17.
Upon the completion of the transaction, Fitch expects to upgrade UBB's Long-Term IDR to 'BBB+', ie one notch below KBC. Assuming the Bulgarian sovereign rating does not change, the IDR would be effectively at the level of Bulgaria's Country Ceiling, therefore the Outlook is likely to be Stable, reflecting the Stable Outlook on the Bulgarian sovereign rating. The bank's Short-Term IDR will likely be upgraded to 'F2' from 'B' and its Support Rating will likely be upgraded to '2' from '5'.
Fitch expects to withdraw UBB's Support Rating Floor (SRF; 'No Floor') following the acquisition of the bank by KBC, as institutional support will become the more likely source of external support for the bank."
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