Moody's on Oct. 17 upgraded Volksbank Wien AG's long-term deposit ratings to Baa1 from Baa2 and changed the outlook to stable from ratings under review, concluding a review initiated Sept. 19.

At the same time, the rating agency affirmed the bank's P-2 short-term deposit rating and A2(cr)/P-2(cr) long- and short-term counterparty risk assessments.

The upgrade reflects the shift in the bank's funding structure due to the recent issuance of €400 million of subordinated debt, which will increase the cushion for depositors to absorb losses in the event of resolution and will reduce the expected loss severity for such liabilities.

Meanwhile, the agency said the stable outlook reflects its view of immaterial changes to the bank's liability structure over the 12- to 18-month outlook horizon, as well as its expectation of a stable baseline credit assessment.