Moody's on March 27 placed Cyprus Cooperative Bank Ltd.'s long-term local- and foreign-currency deposit ratings of Caa2 and long-term counterparty risk assessment of Caa1(cr) on review with direction uncertain.
The agency also downgraded the bank's baseline and adjusted baseline credit assessments to "ca" from "caa2." Its Not-Prime short-term deposit ratings and NP(cr) short-term counterparty risk assessment were affirmed.
The actions follow the lender's March 19 announcement that it tapped Citigroup Global Markets Ltd. to assist it in identifying investors interested in either acquiring the fully licensed bank or all or part of its assets and liabilities.
The downgrade of the baseline credit assessment reflects Moody's view that the lender has a provision shortfall which will have to be plugged either through a capital increase or through the sale of its assets and liabilities.
The review of the long-term deposit ratings and long-term counterparty risk assessment will focus on the outcome of the bank's search for investors. The direction of the resulting ratings action will depend on the extent of any capital raised or the credit profile of the potential acquirer of the bank's assets and liabilities.