Fitch Affirms Banka Koper at 'BBB'; Outlook Negative

Fri Mar 28, 2014 10:48am EDT

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(The following statement was released by the rating agency) LONDON, March 28 (Fitch) Fitch Ratings has affirmed Slovenia-based Banka Koper (BK)'s Long-term foreign currency Issuer Default Rating (IDR) at 'BBB'. The Outlook is Negative. A full list of rating actions is at the end of this commentary. KEY RATING DRIVERS AND SENSITIVITIES: IDRS AND SUPPORT RATING The affirmation of BK's Long-term IDR at 'BBB' and Support Rating at '2' reflects Fitch's view that Intesa Sanpaolo (Intesa; BBB+/Negative) will continue to have a strong propensity to support its subsidiaries in the Central and Eastern Europe (CEE) region, notwithstanding its primary focus on the Italian market. The Negative Outlook on BK's Long-term IDR mirrors that on Intesa. The Long-term IDR could be downgraded if the parent is downgraded, or if there is evidence of a reduced commitment on the part of Intesa to the CEE region. KEY RATING DRIVERS AND RATING SENSITIVITIES: VIABILITY RATING (VR) The affirmation of BK's 'bb' VR reflects recent deposit growth, which has strengthened the bank's funding position, healthy liquidity, adequate capitalisation, and only moderate asset quality problems. BK has the highest VR among Fitch-rated banks in Slovenia reflecting its superior risk management framework, credit underwriting and corporate governance compared with peers, in part due to its ownership by Intesa. However, there is still some downside risk to the VR in light of the weak and uncertain operating environment in Slovenia and significant single-name concentrations. BK's VR could be downgraded in the event of a material deterioration in asset quality that erodes capital. An upgrade of the VR is unlikely in the foreseeable future. The rating actions are as follows: Long-term foreign currency IDR: affirmed at 'BBB', Negative Outlook Short-term foreign currency IDR: affirmed at 'F3' Support Rating: affirmed at '2' Viability Rating: affirmed at 'bb' Contact: Primary Analyst Lindsey Liddell Director +44 20 3530 1008 Fitch Ratings Limited 30 North Colonnade London E14 5GN Secondary Analyst Michal Bryks, ACCA Director +48 22 338 6293 Committee Chair James Watson, CFA Managing Director +7 495 956 9901 Media Relations: Hannah Huntly, London, Tel: +44 20 3530 1153, Email: hannah.huntly@fitchratings.com. Additional information is available at www.fitchratings.com. Applicable criteria, Global Financial Institutions Rating Criteria, dated 15 August 2012, Rating FI Subsidiaries and Holding Companies, dated 10 August 2012, Evaluating Corporate Governance Criteria, dated 12 December 2012, are available at www.fitchratings.com. Applicable Criteria and Related Research: Global Financial Institutions Rating Criteria here Additional Disclosure Solicitation Status here ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

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