September 25 (SeeNews) - Standard and Poor's Global Ratings said on Tuesday it has revised its outlook on Croatia-based Zagrebacka Banka (Zaba) to positive from stable, while affirming its 'BB+' long-term issuer credit rating and its 'BB+' resolution counterparty rating on the bank.
The outlook revision follows the similar action on the sovereign credit rating on Croatia, S&P said in a statement.
"If we upgraded the sovereign, we may also incorporate more parental support into our ratings on Zaba. This is because we think that the bank will continue to operate as a strategically important subsidiary within the UniCredit group (BBB/Stable/A-2)," the rating agency added.
It noted that under its criteria, it could rate the bank three notches above its stand-alone credit profile (SACP) and up to one notch below the rating on its parent company. However, S&P chose to cap its long-term rating on Zaba at the sovereign level because it thinks that Zaba is predominantly exposed to Croatia's economic risks.
"The outlook on Zaba is positive, mirroring that on Croatia. It incorporates our view that Zaba will preserve its strategic role within the UniCredit group over the next 12 months as an important conduit for the group's retail and corporate activities in Croatia and Bosnia and Herzegovina," S&P said.
It added that it could raise its long-term rating on Zaba following a similar action on the sovereign. The same rules apply to the lender's outlook.
"We could revise our outlook back to stable following a similar action on Croatia. Furthermore, although this is currently not our base case, we could also revise the outlook on Zaba back to stable if, despite macroeconomic improvements in Croatia, we thought that Zaba's strategic importance within the UniCredit group had materially diminished or the parent company's creditworthiness had weakened, resulting in deteriorated potential support from the parent," the rating agency concluded.
On September 21, S&P Global Ratings revised the outlook on Croatia to positive from stable, reflecting its expectation that the country's economy will continue to expand.
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