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Dec 11, 2017 14:46 EEST
December 11 (SeeNews) - Fitch Ratings said on Monday it has upgraded the Long-Term Issuer Default Ratings (IDRs) of Bulgarian lenders Societe Generale Expresbank and United Bulgarian Bank (UBB), as well leasing company Sogelease to 'A-' from 'BBB+' with stable outlooks.
Fitch has also affirmed Allianz Bank Bulgaria's Long-Term IDR at 'BBB+' with a stable outlook, the agency said in a statement.
The upgrades of Societe Generale Expresbank, UBB and Sogelease reflect the fact that their Long-Term IDRs are no longer constrained by Bulgaria's Country Ceiling, Fitch said.
Earlier this month, Fitch upgraded Bulgaria’s Country Ceiling to 'A-' from 'BBB+'. Fitch also upgraded Bulgaria's Long-Term Foreign- and Local-Currency Issuer Default Ratings (IDRs) to 'BBB' from 'BBB-'.
Fitch Ratings also said in the statement:
"KEY RATING DRIVERS
IDRS, SUPPORT RATINGS
The IDRs and SRs of Expressbank and UBB are driven by potential support available from their respective parents, Societe Generale (SG, A/Stable, 99.7% stake) and KBC Bank (A/Positive, 99.9% stake). The Stable Outlooks on Expressbank and UBB reflect that on SG and the Bulgarian sovereign, respectively.
Fitch believes that there is an extremely high probability that Expressbank and UBB would be supported, if required, by SG and KBC, respectively. The banks are based in Central and eastern European (CEE) region, which is strategically important for SG and KBC. The Bulgarian banks' synergies with their parents are strong. In our assessment of support we also take into consideration the almost full ownership of Expressbank and UBB by their parents, potential high reputational risk to the owners if their Bulgarian subsidiaries default and a high level of management and operational integration.
In our opinion, any required support for the two banks would be small relative to the respective parents' ability to provide it. This reflects the owners' solid credit profiles and the relatively small size of their Bulgarian subsidiaries.
The Short-Term IDRs of Expressbank and UBB are the higher of two Short-Term IDRs corresponding with a 'A-' Long-Term IDR because of SG's and KBC's solid liquidity and our view that the parents' propensity to support is more certain in the near term.
Sogelease is 100% owned by Expressbank and its IDRs are equalised with those of Expressbank because the leasing company is the bank's core subsidiary. Sogelease is an integral part of financial services provided by SG in Bulgaria and is strongly integrated into the parent group at both operational and funding levels.
The affirmation of ABB's support-driven IDRs reflects Fitch's opinion of a high probability that it would be supported, if required, by Allianz SE (AA-/Stable), the bank's ultimate majority shareholder. Our opinion considers Allianz's strong credit risk profile and ABB's relatively small size. However, Fitch believes that ABB has limited strategic importance to Allianz. Consequently, ABB's Long-Term IDR is four notches below that of Allianz. This is based on Allianz's strategic focus on the insurance business, with ABB its only banking subsidiary in CEE, and ABB's marginal contribution to the parent group's profits. In our view, Allianz's commitment to ABB depends on the subsidiary's contribution to Allianz's insurance and asset management business and its financial self-sustainability. ABB's Stable Outlook mirrors that on its parent.
IDRS, SUPPORT RATINGS
The IDRs and SRs of all three banks and Sogelease are sensitive to our view of propensity and ability of their respective parents to support them. The entities could be downgraded if Fitch believes that their strategic importance to their owners has weakened (which we view as unlikely) or if their respective parent banks are downgraded.
An upgrade of Expressbank, UBB and Sogelease would require an upgrade of their respective parents and an upward revision of Bulgaria's Country Ceiling. ABB is unlikely to be upgraded."
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