March 23 (SeeNews) - Moody's Investors Service said on Thursday it has upgraded Romania's Raiffeisen Bank SA long-term and short-term local and foreign-currency deposit ratings to Baa3 from Ba1.
Moody's also upgraded the bank's adjusted baseline credit assessment to ba2 from ba3 and its long-term and short-term Counterparty Risk Assessment (CRA) to Baa2 from Baa3.
Moody's also changed the outlook on Raiffeisen Bank and its long-term deposit ratings to stable from positive.
The rating action reflects the upgrade of the bank's parent - Raiffeisen Bank International.
Moody's also said in the statement:
"RATINGS RATIONALE
The upgrade by one notch of the bank's deposit ratings, the adjusted BCA and the CRA reflects RBI's BCA upgrade to ba2 from ba3, which leads to a one-notch of parental support uplift for Raiffeisen Bank SA. Previously the two banks' BCAs were positioned at the same level of ba3, hence Raiffeisen Bank SA's ratings did not benefit from parental support uplift. Moody's considers the Romanian operation as an important part of RBI and expects high level of parental support in case of need.
Raiffeisen Bank SA's ba3 BCA, which is not affected by today's action, is supported by the bank's good financial performance, capitalisation and liquidity, which it has maintained in recent years.
The bank's Baa3 deposit ratings incorporate the results from Moody's Advanced Loss Given Failure (LGF) analysis, which provides two notches of uplift from the bank's adjusted BCA of ba2. Raiffeisen Bank SA benefits from a large volume of deposits and limited senior and subordinated debt, resulting in very low loss given failure for its deposits.
The outlook on Raiffeisen Bank SA's deposit ratings has been changed to stable from positive, in line with the outlook on the parent bank's ratings.
-- WHAT COULD MOVE THE RATINGS UP/DOWN
Upward pressure on Raiffeisen Bank SA's ratings could develop (1) from a material improvement in the operating environment, and (2) if the bank achieves stronger loan book quality while maintaining good capital adequacy and profitability. Alterations in the bank's liability structure may change the amount of uplift provided by Moody's Advanced LGF analysis and lead to a higher notching from the bank's adjusted BCA, thereby positively affecting deposit ratings.
The bank's ratings could experience downward pressure as a result of substantial weakening in its profitability, erosion of its capital base and/or increase in asset risk. Furthermore, alterations in Raiffeisen Bank SA's liability structure may change the amount of uplift provided by Moody's Advanced LGF analysis and lead to a lower notching from the bank's adjusted BCA, thereby negatively affecting deposit ratings and CRA."
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