March 9 (SeeNews) - Fitch Ratings said on Thursday it has revised the long-term issuer default ratings (IDR) on Romania-based Banca Comerciala Romana's (BCR) to 'BBB+' from 'BBB', with stable outlook.
BCR's Viability Rating (VR) was not affected by the rating actions, Fitch said in a statement.
In October 2016, Fitch affirmed BCR at 'BBB' and upgraded its viability rating to 'bb' from 'bb-'
Fitch also said in the statement:
"The upgrade of BCR's support-driven IDRs to 'BBB+' follows the rating action taken by Fitch on the bank's 93.6%-owner, Erste Group Bank AG (Erste). Erste's IDR was upgraded to 'A-' from 'BBB+' (see 'Fitch Upgrades Erste Group Bank AG to 'A-'; Outlook Stable' dated 3 March 2017 on www.fitchratings.com).
KEY RATING DRIVERS - IDRS, SUPPORT RATING
BCR's IDRs are notched down once from Erste's and reflects Fitch's opinion of a high probability that the bank would be supported, if required. We view BCR as a strategically important subsidiary for Erste, despite the recent volatility in its performance. Our view is driven by the important role of Romania and the wider central and eastern Europe (CEE) region for Erste, by BCR's strong integration into the group and by the track record of support to date. In addition, the potential cost of support would be manageable, given the small size of the Romanian subsidiary bank relative to parent group assets.
The Stable Outlook on BCR's IDRs reflects that on the parent. BCR's Long-Term IDRs are two notches above the Romanian sovereign IDRs (BBB-) and at the Romanian Country Ceiling. The two-notch uplift of the support-driven IDRs above the Romanian sovereign ratings reflects our view that, in the event of a systemic stress in Romania, BCR would retain its ability to service debt in FC and LC based on: i) the support available from its parent and ii) our expectation that in a systemic stress scenario, the risk of banking sector restrictions being imposed in Romania is lower than the risk of a sovereign default.
RATING SENSITIVITIES - IDRS, SUPPORT RATING
BCR's IDRs and the SR rating are primarily sensitive to changes in the parent's IDRs and the Romanian sovereign ratings. Fitch views these changes unlikely at present, given the Stable Outlooks on the parent's and country's IDRs. The IDRs and Support Rating are also sensitive to a change in Fitch's view or the weakening of the commitment of Erste to its Romanian subsidiary, or to the wider CEE region, which we currently view as unlikely.
The rating actions are as follows: Banca Comerciala Romana S.A. - Long-Term Foreign Currency IDR: upgraded to 'BBB+' from 'BBB'; Outlook Stable - Short-Term Foreign Currency IDR: affirmed at 'F2' - Long-Term Local Currency IDR: upgraded to 'BBB+' from 'BBB'; Outlook Stable - Support Rating: affirmed at '2' - Viability Rating: unaffected at 'bb'".