13/06/2015 10:57
Moody's Investors Service has upgraded Hellenic Bank's long-term deposit rating to Caa2 from Caa3, assigning stable outlooks to the long-term deposit ratings.
It has also affirmed the bank's caa3 baseline credit assessment (BCA) and the Not-Prime short-term deposit ratings.
Moody's rating actions on Hellenic Bank primarily reflect the "Very Weak" macro profile of Cyprus (B3 stable), the bank's weak financial profile and Moody's Advanced Loss Given Failure (LGF) analysis.
According to the credit agency the rating is based on its new banking methodology which includes a number of elements that Moody's has developed to help accurately predict bank failures and determine how each creditor class is likely to be treated when a bank fails and enters resolution. These new elements capture insights gained from the crisis and the fundamental shift in the banking industry and its regulation.
The agency states that the upgrade of the bank's deposit ratings to Caa2 from Caa3 takes into account the LGF analysis of the bank's own volume of deposits and securities subordinated to them in Moody's creditor hierarchy. Hellenic Bank benefits from a large volume of deposits (accounting for 21% of tangible assets), resulting in a low loss given failure.
It is noted that upward pressure on the ratings could develop following a reduction in the
volume of NPLs and increased loan loss provisions. Downward pressure on the bank's ratings could develop following higher-than-expected asset-quality deterioration and credit costs, which would significantly erode the bank's capital buffers bringing them close to the regulatory minimum.
It has also affirmed the bank's caa3 baseline credit assessment (BCA) and the Not-Prime short-term deposit ratings.
Moody's rating actions on Hellenic Bank primarily reflect the "Very Weak" macro profile of Cyprus (B3 stable), the bank's weak financial profile and Moody's Advanced Loss Given Failure (LGF) analysis.
According to the credit agency the rating is based on its new banking methodology which includes a number of elements that Moody's has developed to help accurately predict bank failures and determine how each creditor class is likely to be treated when a bank fails and enters resolution. These new elements capture insights gained from the crisis and the fundamental shift in the banking industry and its regulation.
The agency states that the upgrade of the bank's deposit ratings to Caa2 from Caa3 takes into account the LGF analysis of the bank's own volume of deposits and securities subordinated to them in Moody's creditor hierarchy. Hellenic Bank benefits from a large volume of deposits (accounting for 21% of tangible assets), resulting in a low loss given failure.
It is noted that upward pressure on the ratings could develop following a reduction in the
volume of NPLs and increased loan loss provisions. Downward pressure on the bank's ratings could develop following higher-than-expected asset-quality deterioration and credit costs, which would significantly erode the bank's capital buffers bringing them close to the regulatory minimum.
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