November 20, 2017 / 1:04 PM / in a year

Fitch Revises 4 Hungarian Banks' Outlooks to Positive; Affirms Ratings

(The following statement was released by the rating agency) WARSAW/LONDON, November 20 (Fitch) Fitch Ratings has revised the Outlooks on Hungarian Export Import Bank (Hexim), MFB Hungarian Development Bank Private Limited Company (MFB), Erste Bank Hungary Zrt. (EBH) and Kereskedelmi es Hitelbank Zrt (K&H) to Positive from Stable. The Long-Term Issuer Default Ratings (IDRs) of Hexim and MFB have been affirmed at 'BBB-' and of EBH and K&H at 'BBB'. A full list of rating actions is at the end of this rating action commentary. The rating action follows the revision of the Outlook on the Hungarian sovereign (see 'Fitch Revises Hungary's Outlook to Positive; Affirms at 'BBB-' dated 10 November 2017 on EBH's and K&H's Viability Ratings are unaffected by these rating actions. KEY RATING DRIVERS IDRS, SUPPORT RATINGS AND SENIOR DEBT Hexim's and MFB's IDRs, Support Rating Floors and senior unsecured debt ratings are equalised with those of the Hungarian sovereign, reflecting Fitch's view of the authorities' high propensity to provide extraordinary support to both banks, if required. This view factors in both banks' strategic policy roles to promote Hungarian exports (Hexim) and fund domestic economic growth (MFB), full state ownership and direct irrevocable state guarantees for their obligations. Fitch also takes into consideration each bank's dedicated legal acts that govern the banks' tasks, scope of activities and relationship with the state. EBH's and K&H's IDRs and Support Ratings reflect Fitch's opinion of a high propensity that these banks would be supported, if required, by their respective parents - Erste Group Bank AG (A-/Stable) and KBC Bank (A/Stable). This is based on the strategic importance of the central and eastern European region for each of the parents. Accordingly, EBH and K&H could be rated within one notch of their parents, if country risks allowed. EBH's and K&H's Long-Term IDRs remain capped at one notch above the Hungarian sovereign to reflect the country risks they face. In case of a sovereign default these risks could limit the banks' ability to service their debt or their parents' propensity to continue providing support, or both. The Positive Outlook on all banks' Long-Term IDRs reflects that on the Hungarian sovereign. RATING SENSITIVITIES IDRS, SUPPORT RATINGS AND SENIOR DEBT The IDRs of the four banks and senior debt ratings of Hexim and MFB are sensitive to changes to the Hungarian sovereign ratings. Consequently, a potential upgrade of Hungary would result in an upgrade of the banks' IDRs. Hexim's and MFB's ratings are also sensitive to the state's willingness to support them, which Fitch believes is unlikely to change in the foreseeable future. The Long-Term IDRs of EBH and K&H are also sensitive to a positive change in Fitch's perception of country risks the Hungarian banks face. The rating actions are as follows: Hexim Long-Term IDR: affirmed at 'BBB-'; Outlook revised to Positive from Stable Short-Term IDR: affirmed at 'F3' Support Rating: affirmed at '2' Support Rating Floor: affirmed at 'BBB-' Senior unsecured debt long-term rating: affirmed at 'BBB-' Senior unsecured debt short-term rating: affirmed at 'F3' MFB Long-Term IDR: affirmed at 'BBB-'; Outlook revised to Positive from Stable Short-Term IDR: affirmed at 'F3' Support Rating: affirmed at '2' Support Rating Floor: affirmed at 'BBB-' Senior unsecured debt long-term rating: affirmed at 'BBB-' EBH Long-Term IDR: affirmed at 'BBB', Outlook revised to Positive from Stable Short-Term IDR: affirmed at 'F2' Support Rating: affirmed at '2' Viability Rating: 'bb', unaffected K&H Long-Term IDR: affirmed at 'BBB', Outlook revised to Positive from Stable Short-Term IDR: affirmed at 'F2' Support Rating: affirmed at '2' Viability Rating: 'bb+', unaffected Contact: Primary Analyst Olga Ignatieva Senior Director +7 495 956 69 06 Fitch Ratings Moscow Valovaya Str, 26, Moscow Secondary Analyst Agata Gryglewicz Associate Director +48 22 330 69 70 Committee Chairperson James Watson Managing Director +7 495 956 6657 Media Relations: Peter Fitzpatrick, London, Tel: +44 20 3530 1103, Email: Additional information is available on Applicable Criteria Global Bank Rating Criteria (pub. 25 Nov 2016) here Additional Disclosures Dodd-Frank Rating Information Disclosure Form here Solicitation Status here Endorsement Policy here ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. 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