Fitch Revises BCR's Outlook to Negative; Affirms at 'BBB+'

Tue Aug 12, 2014 6:08am EDT

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(The following statement was released by the rating agency) WARSAW/LONDON, August 12 (Fitch) Fitch Ratings has revised the Outlook on Romania-based Banca Comerciala Romana S.A.'s (BCR) Long-term foreign and local currency Issuer Default Ratings (IDR) to Negative from Stable and affirmed the IDRs at 'BBB+', Short-term IDR at 'F2' and Support Rating at '2'. BCR's Viability Rating (VR) was not affected by the rating actions. KEY RATING DRIVERS: IDRs AND SUPPORT RATING BCR's IDRs and Support Rating are driven by the potential support it can expect to receive from its 93.6%-owner, Erste Group Bank AG (Erste; A/Negative). As a strategically important subsidiary of Erste, Fitch would normally notch BCR's IDR one notch below that of its parent, implying an IDR for BCR of 'A-'/Negative. However, BCR's rating is constrained by the Romanian Country Ceiling of 'BBB+'. The revision of the Outlook to Negative on BCR's Long-term IDR is driven by the downgrade of Erste's VR to 'bbb+' from 'a-' (see 'Fitch Affirms Large Austrian Banks at 'A'; Outlook Negative' dated 7 August 2014 at www.fitchratings.com). The Outlook revision takes into consideration Fitch's statement that it is likely to downgrade Erste's IDR to the level of its VR either by end-2014 or 1H15, when its Support Rating and Support Rating Floor will likely be downgraded to '5' and revised to 'No Floor'. At that point, the anchor rating driving BCR's IDR will be 'BBB+' and BCR's IDR will likely be downgraded to 'BBB'. The downgrade of BCR's Long-term IDR to 'BBB' is unlikely to trigger the downgrade of its Short-term IDR of 'F2'. For more information on Erste's rating action, see Fitch Affirms Large Austrian Banks at 'A'; Outlook Negative' at www.fitchratings.com. Fitch believes that BCR continues to be strategically important to its group despite the weak performance of the Romanian market, in light of Erste's focus on Central and Eastern European (CEE), the strong integration into the group and the track record of support to date. RATING SENSITIVITIES - IDRS, SUPPORT RATING BCR's Long-term IDRs are sensitive to both a change in Erste's Long-term IDR or in Romania's Country Ceiling. BCR's IDRs are also sensitive to any reduction in Fitch's view of Erste's commitment to CEE and to the Romanian market in particular. A downgrade of the Support Rating would require a downgrade of Erste's Long-term IDR to 'BBB-' or below, or a change in Fitch's view of the propensity of Erste to provide support to BCR. Contact: Primary Analyst Artur Szeski Senior Director +48 22 338 6292 Fitch Polska SA Krolewska 16, Warsaw 00-103 Secondary Analyst Radu Gheorghiu Analyst +44 20 3530 1253 Committee Chairperson Claudia Nelson Senior Director +44 20 3530 1191 Media Relations: Elaine Bailey, London, Tel: +44 203 530 1153, Email: elaine.bailey@fitchratings.com. Additional information is available on www.fitchratings.com Applicable criteria, 'Global Financial Institutions Rating Criteria', dated 31 January 2014 is 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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