Fitch withdraws support ratings of Hungarian banks
The credit-rating company Fitch Ratings announced yesterday that it will no longer provide Support Ratings of four CEE banks, including Hungary-based OTP Bank Plc. and MKB Bank Zrt.
Apparently squeezed by competition, Fitch explained that, from now on, they would only rate banks who are willing to pay for the service.
At the end of Q1 this year, OTP was the largest bank in Hungary accounting for 27% of sector assets and 25% of deposits. Based on its Fitch Support Rating of 3, there is a moderate probability that the Hungarian sovereign state (BB+/Stable) would support the bank if necessary.
As long as Bayerische Landesbank (A+/Negative) remains the majority owner of MKB (Fitch Support Rating of 2), Fitch analysts determined that there is a high probability the former would support the latter.
Due to the global financial and economic crisis, and increasing competition, credit rating agencies face shrinking profit margins, a factor that apparenty impacted Fitch’s decision.
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