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Moody's upgrades 2 Romanian lenders

Moody's on Aug. 9 upgraded certain ratings of two Romanian banks, BRD-Groupe Société Générale SA and Banca Comerciala Romana SA.

The Société Générale SA unit's long- and short-term local-currency bank deposit ratings were upgraded to Baa2/Prime-2 from Baa3/Prime-3, with a positive outlook on the long-term rating. The latter bank's long- and short-term local- and foreign-currency deposit ratings were raised to Baa3/Prime-3 from Ba1/Not Prime, with the outlook on the long-term foreign-currency deposit rating revised to stable from positive and the outlook on the local-currency deposit rating left unchanged at positive.

Moody's upgraded BRD's baseline credit assessment to "ba3" from "b1" and adjusted baseline credit assessment to "ba1" from "ba2." At the same time, the rating agency affirmed the bank's Baa3/Prime-3 long- and short-term foreign-currency bank deposit ratings and changed the outlook on the long-term rating to stable from positive. The Baa2(cr)/Prime-2(cr) long- and short-term counterparty risk assessments were also affirmed.

The upgrade of BRD's long-term local-currency bank deposit rating was based, among other factors, on the agency's unchanged high affiliate support assumption from the bank's French parent. The positive outlook on the rating is based on Moody's expectation of additional improvements in the bank's credit profile over the next 12 to 18 months, owing to continued reduction in problem loans and maintaining good level of capitalization.

Meanwhile, the rating agency upgraded Banca Comerciala Romana's baseline credit assessment to "b1" from "b2," the adjusted baseline credit assessment to "ba2" from "ba3" and the long- and short-term counterparty risk assessments to Baa2(cr)/Prime-2(cr) from Baa3(cr)/Prime-3(cr).

The upgrade of the lender's deposit ratings was based on the upgrade of its baseline credit assessment; the agency's assumption of support from the bank's ultimate parent company, Erste Group Bank AG; and a higher rating uplift from the agency's advanced loss-given-failure analysis.

The upgrade of the bank's baseline credit assessment is based on Moody's view of the continuing improvements in the lender's asset quality, profitability, capital adequacy and funding structure.

The outlook on the bank's long-term foreign-currency deposit rating is at the level of the foreign-currency deposit ceiling for Romania, Moody's noted, adding that the positive outlook on the long-term local-currency deposit rating reflects its expectation of further improvement in the bank's credit profile in the next 12 to 18 months.