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Moody’s worsened the rating perspective for BCR, BRD and Raiffeisen Bank
Moody’s Investors Service revised from stable to negative the rating perspective of three banks in Romania – Banca Comerciala Romana (BCR), BRD – Groupe Societe Generale (BRD) and Raiffeisen Bank – and confirmed at ‘Baa1’ the ratings attributed for the long termn deposits and at ‘Baa3’ the qualifications for long term deposits in foreign currency, shows the press release of the agency for financial evaluation.
The decision comes after, one week ago, Moody’s worsened the rating perspective of Romania, from stable to negative, and reconfirmed at ‘Baa3’ the ratings for the long term debt in foreign currency and local currency.
The confirmation of the ratings for the BRD,BCR and Raiffeisen deposits with the change of perspective from stable to negative, is determined by the change of the perspective of sovereign rating at negative and reflects the opinion of Moody’s regarding the correlations of significant risk between a bank and the country where is operates, taking into consideration the limits which a government can impose on the domestic entitites, the agency appreciates.
According to the Moody’s methodology, the ratings for banking deposits cannot surpass the sovereign rating with more than two levels. Moreover, the qualifications for the long term deposits în foreign currency ‘Baa3” with their negative perspectives are determined by the applicable ceiling of Romania “Baa3’ for foreign currency deposits, which limits the rating of the banks. The ceiling for foreign currency deposits includes the risk that the Romanian Government interfere in the payment of the foreign currency deposits of the banks, the Moody’s press release says.
Any deterioration of the solvability of Romania will have negative pressure on the ratings of the banks for deposits. Moreover, the banks ratings could be revised downwards in case the opera?ional conditions worsen more than estimated at present and will limit the business activities leading to higher risks for assets and the erosion of the capital.
Taking into consideration the negative perspective, there is at present a limited potential for the improvement of the banks rating, Moody’s appreciates.