December 23 (SeeNews) - Fitch Ratings said that it has upgraded the long-term Issuer Default Ratings (IDRs) of Bulgaria's UniCredit Bulbank and Croatia's Zagrebacka Banka (ZABA) to 'BBB' from 'BBB-', with stable outlooks.
The rating actions follow the upgrade of the long-term IDR of UniCredit Bulbank's and ZABA's parent, Italy-based UniCredit to 'BBB' from 'BBB-' on December 17, Fitch said in a statement on Wednesday.
The ratings agency added that it has withdrawn UniCredit Bulbank's support rating as it is no longer relevant to the agency's coverage following the publication of its updated bank rating criteria in November. "In line with the updated criteria, we have assigned Bulbank a shareholder support rating (SSR) of 'bbb'," Fitch said.
Fitch also said in the statement:
"KEY RATING DRIVERS
IDRs and SSRs
Bulbank and ZABA's IDRs and SSRs reflect the high likelihood of support from UniCredit. We equalise their IDRs with those of their parent, as in our view, a default of either subsidiary would entail considerable reputational risk for UniCredit, given their common regulation and inclusion in UniCredit's single point of entry resolution group. In our view, any required support for Bulbank or ZABA would be immaterial relative to the parent's ability to provide it. The Stable Outlooks reflect that on UniCredit.
Key Rating Driver 1
Bulbank's and ZABA's Short-Term IDRs of 'F2' are the higher of the two possibilities corresponding to the Long-Term IDR of 'BBB'. This reflects our opinion that propensity to support is more certain in the near term.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to negative rating action/downgrade:
- Bulbank's and ZABA's IDRs and SSRs would likely be downgraded if their parent's IDR was downgraded.
- Bulbank's and ZABA's IDRs and SSRs would also be downgraded if there is a change in the resolution strategy of the group with respect to Bulbank or ZABA, a material rise in sale risk of either subsidiary or a change in our view of the parent's propensity to support Bulbank or ZABA for other reasons.
Factors that could, individually or collectively, lead to positive rating action/upgrade:
- Bulbank's and ZABA's IDRs and SSRs would likely be upgraded if their parent's IDR was upgraded"
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