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Moody’s warns HB for new downgrading

05/10/2005 08:27
In its latest report for the Hellenic Bank, the international credit rating agency, Moody’s, warned for a new downgrading if the bank does not improve its credit portfolio quality and its weakening profitability. Moody’s believes that “the separation of the chairman and chief executive positions is a step in the right direction to improve the bank’s corporate governance framework”.

According to Moody’s “the FSR (Financial Strength Rating) captures an increasing, inflexible cost base which, coupled with elevated provisioning expenses, pressures the bank’s profitability”.

As for the expansion in the Greek market, Moody’s believes that “the operations in Greece have been loss-making for the last six financial quarters, weighting negatively on the group’s overall financial performance”. “A quick turnaround is vital to put the Greek operations on a sounder footing so that they cease to hamper the group’s overall financial performance”, it reported.

“The weak performance of the Group led to an extensive change at the top management level”. However, “the appointment at both executive and non-executive positions of a number of officers with no direct banking experience warrants close monitoring by Moody’s”, the report said.

Moody’s also referred to the corporate governance level of the Cypriot banks: “We believe that the Cypriot banks need to do more before their corporate governance practices reach a level commensurate with that of more developed market”.