VIENNA Feb 19 Ratings agency Moody's Investors Service has downgraded more Austrian banks on concern that the government has not ruled out letting nationalised lender Hypo Alpe Adria go bust.
"The main driver of these actions is the precedent set in the case of Hypo Alpe-Adria-Bank International AG, in which Moody's observes rising uncertainty about the intentions of the bank's current owner, the Austrian government (Aaa negative), with regards to the bank's future," it said.
It noted late on Tuesday that in the debate about winding down Hypo "the possibility has been mooted, and has not been conclusively ruled out, that bondholders may not be fully protected in that process, notwithstanding the statutory deficiency guarantee on their holdings".
"The debate signals that Austrian authorities more generally are willing to countenance, even if not yet to favour, bank resolutions which might greatly reduce the value of such a deficiency guarantee to ensure full and timely payment of interest and principal," it added.
Moody's last week downgraded Hypo and its home province of Carinthia for the same reasons.
In the latest action, Moody's cut ratings of the guaranteed long-term senior unsecured and subordinated debt instruments of Hypo Tirol Bank AG, Vorarlberger Landes- und Hypothekenbank AG and UniCredit Bank Austria AG that benefit from guarantees from individual Austrian states or the city of Vienna.
It placed on review for downgrade the Prime-1 short-term guaranteed deposit ratings of Hypo Tirol Bank AG while affirming the Prime-1 short-term guaranteed deposit ratings of Vorarlberger Landes- und Hypothekenbank AG.
It also placed on review for downgrade the long-term Aaa backed senior unsecured debt ratings of Pfandbriefstelle der Oesterreichischen Landes-Hypothekenbanken (Pfandbriefstelle).
The rated debt obligations of Pfandbriefstelle are guaranteed by its member banks - regional commercial and mortgage banks - and those banks' guarantors, the respective Austrian states.