(Repeat for additional subscribers)
July 23 (The following statement was released by the rating agency)
Viability Ratings on banks in European developed markets (DM) have improved slightly since
the start of 2014, indicating early signs of recovery in European banks' intrinsic
creditworthiness, Fitch Ratings says.
DM European banks had the highest number of VR upgrades globally in 2Q14. There
were nine VR upgrades in the region in 2Q14 and eight upgrades in 1Q14, so banks
in DM Europe accounted for 40% of VR upgrades globally in 1H14. The region's VR
upgrades far outweighed VR downgrades. These positive trends are flowing through
to bank Issuer Default Ratings (IDRs). European emerging-market banks accounted
for 26% of global IDR upgrades, mostly VR driven, in 2Q14.
The trends were partly due to improving macroeconomic conditions. For the first
time since 2009, no eurozone country is on Negative Outlook. Progress made in
banks' restructuring plans contributed to the stabilisation in the region.
But prospects for DM European banks' IDRs remain tough - around 44% of IDRs are
on Negative Outlook/Watch - largely but not exclusively due to our view that
implicit sovereign support for banks is being reduced. Our support review in
March had greater impact in DM Europe than in other regions because effective
bank resolution frameworks are more advanced there than in other parts of the
world apart from the US. In addition, a relatively high proportion of bank IDRs
in DM Europe (around 40%) factor in and are driven by support rather than
intrinsic financial strength. Around a third of DM Europe bank ratings are
driven by state support. This support is likely to decline substantially by
Outside Europe, bank rating trends point to stable and marginally improving
expectations for DM banks. Outlook stability remains high in DM Americas and
Asia/Australasia. Global emerging-market bank rating stability fell in 2Q14 in
all areas except Asia; the proportion of Stable Outlooks has declined across all
emerging-market regions in the last four quarters.
For further details of quarterly global bank ratings, see "Global Bank Rating
Trends 2Q14", available at www.fitchratings.com.
Link to Fitch Ratings' Report: Global Quarterly Bank Rating Trends 2Q14=