Moody's downgrades financial strength of OTP Bank, mortgage unit
Ratings agency Moody's on Tuesday said it had downgraded the financial strength ratings (FSR) of Hungary's OTP Bank Nyrt and its wholly-owned subsidiary OTP Mortgage Bank Zrt to C+ from B-.
The review did not affect the two banks' A1 local currency bank deposit ratings, the A2 foreign currency subordinated debt ratings of OTP Bank, which are affirmed with stable outlook, or their A1 foreign currency bank deposit ratings, which are also affirmed and remain on review for possible downgrade in line with the review for possible downgrade on the sovereign ratings, Moody's said.
According to Moody's, the FSR downgrade to C+ primarily reflects OTP's increased risk profile, although the rating agency also noted the rapid expansion of the bank and the effect that this may have on stretching the bank's management and risk resources following its 2006 acquisitions.
The rating action concludes the review for possible downgrade initiated on June 6, 2006, which focused on the impact of OTP's 2006 acquisitions on its risk profile and financial fundamentals over the short to medium term.
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