Fitch Revises Outlook of 6 CEE Subsidiaries of Erste, Societe Generale and Commerzbank to Negative

Fri Mar 28, 2014 12:18pm EDT

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(The following statement was released by the rating agency) LONDON/MOSCOW/WARSAW, March 28 (Fitch) Fitch Ratings has revised the Outlooks for Ceska Sporitelna (CS), Slovenska Sporitelna (SLSP), Komercni Banka (KB), mBank, mBank Hipoteczny and mLeasing to Negative from Stable. The Long and Short-term IDRs and Support Ratings of the entities were affirmed, while the Viability Ratings were not affected. A full list of rating actions is provided at the end of this commentary. The Outlook revisions follow similar rating actions on 26 March on the banks' respective parents i.e. Erste Group (A/Negative Outlook/a-), Societe Generale (SG; A/Negative Outlook/a-) and Commerzbank (A+/Negative Outlook/bbb). For more details refer to Fitch's commentary 'Fitch Revises Outlooks on 18 EU Commercial Banks to Negative on Weakening Support' at www.fitchratings.com. RATING DRIVERS: IDRS, SENIOR DEBT, SUPPORT RATINGS The IDRs, senior debt (where assigned) and Support ratings of these entities are driven by Fitch's view that there is an extremely high probability of support being extended to them by their parent banks in case of need. According to Fitch's criteria, CS and SLSP are viewed as core subsidiaries of Erste Group, and their support-driven IDRs are equalised with those of the parent. KB and mBank are viewed as strategically important subsidiaries of SG and Commerzbank, respectively, and their Long-term IDRs are therefore notched down one level from the Long-term IDRs of their respective parents. mBank Hipoteczny and mLeasing are considered by Fitch as core subsidiaries of mBank, and their IDRs are equalised with the parent. RATING SENSITIVITIES: IDRS, SENIOR DEBT, SUPPORT RATINGS The Long-term IDRs and, where assigned, senior debt ratings, of each of the banks will most likely be downgraded if their respective parents' Long-term IDRs are downgraded. A downward revision of the parents' Support Rating Floors is likely to cause downgrades of their Long-term IDRs to the level of their Viability Ratings (VR) at the time, unless mitigating factors arise in the meantime. Mitigating factors could include upgrades of VRs to the level of current SRFs, significant increases in buffers of junior debt or corporate actions. The VRs of Erste Group and SG are currently one notch below their Long-term IDRs; hence a lowering of those banks' SRFs would at present be likely to result in a one-notch downgrade of the Long-term IDRs of both the parents and their subsidiaries - CS, SLSP and Komercni. Commerzbank's VR is currently four notches below its Long-term IDR; hence a lowering of the bank's SRF could result in a downgrade of similar magnitude for mBank, mBank Hipoteczny and mLeasing. Fitch expects that the propensity of the parent banks to support their subsidiaries will remain strong. However, the support-driven ratings could also be sensitive to any weakening of propensity of the parents to provide support. The rating actions are as follows: Komercni Banka Long-term IDR affirmed at 'A-'; Outlook revised to Negative from Stable Short-term IDR affirmed at 'F1' Support Rating affirmed at '1' Viability Rating unaffected at 'bbb+' Ceska Sporitelna Long-term IDR affirmed at 'A'; Outlook revised to Negative from Stable Short-term IDR affirmed at 'F1' Support Rating affirmed at '1' Viability Rating unaffected at 'bbb+' Slovenska Sporitelna Long-term IDR affirmed at 'A'; Outlook revised to Negative from Stable Short-term IDR affirmed at 'F1' Support Rating affirmed at '1' Viability Rating unaffected at 'bbb+' mBank Long-term IDR affirmed at 'A'; Outlook revised to Negative from Stable Short-term IDR affirmed at 'F1' Support Rating affirmed at '1' Viability Rating unaffected at 'bbb-' Long-term senior unsecured debt rating: affirmed at 'A' Short-term senior unsecured debt rating: affirmed at 'F1' mFinance France Long-term senior unsecured debt rating: affirmed at 'A' mBank Hipoteczny Long-term IDR affirmed at 'A'; Outlook revised to Negative from Stable Short-term IDR affirmed at 'F1' Support Rating affirmed at '1' mLeasing Long-term IDR affirmed at 'A'; Outlook revised to Negative from Stable Short-term IDR affirmed at 'F1' Support Rating affirmed at '1' Contact: Primary Analysts Olga Ignatieva (Komercni Banka, Ceska Sporitelna, Slovenska Sporitelna) Senior Director +7 495 956 69 06 Fitch Ratings Moscow Valovaya Str, 26 Moscow Michal Bryks, ACCA (mBank, mBank Hipoteczny, mLeasing) Director +48 42 338 6293 Fitch Polska S.A. Krolewska 16, 00-103 Warsaw Secondary Analysts Artur Szeski (mBank, Komercni Banka, Ceska Sporitelna, Slovenska Sporitelna) Senior Director +48 22 338 6292 Agata Gryglewicz (mBank Hipoteczny, mLeasing) Associate Director +48 22 330 6970 Committe Chairperson James Watson Managing Director +7 495 956 6657 Media Relations: Hannah Huntly, London, Tel: +44 20 3530 1153, Email: hannah.huntly@fitchratings.com; Malgorzata Socharska, Warsaw, Tel: +48 22 338 62 81, Email: Malgorzata.Socharska@Fitchratings.com. Additional information is available on www.fitchratings.com Applicable criteria, 'Global Financial Institutions Rating Criteria', dated 31 January 2014 'Rating FI Subsidiaries and Holding Companies' dated 10 August 2012 and 'Rating Financial Institutions Above the Sovereign' dated 11 December 2012 are available at www.fitchratings.com. Applicable Criteria and Related Research: Global Financial Institutions Rating Criteria here Rating FI Subsidiaries and Holding Companies here Rating Financial Institutions Above the Sovereign 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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