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Moody's lowers ratings on four Hungarian banks

Ratings

Moody's lowered by between two to four notches the baseline credit assessments on the banks because of the "increasingly weak economic and operating environment in Hungary and the subsequent negative implications this has on all four banks' franchises, asset quality and profitability". The lower baseline credit assessments prompted the downgrades of between one and three notches of the banks' long-term local-currency and foreign-currency deposit ratings, it added.
    Moody's lowered Budapest Bank's baseline credit assessment by two notches to b2 from ba3. It also downgraded the bank's local and foreign-currency deposit ratings to Ba3 from Ba1 and to Ba3 from Ba2. Moody's said the bank would benefit from a "moderate likelihood" of parental support from General Electric Capital Corporation.
    Moody's lowered K&H Bank's baseline credit assessment by two notches to b2 from ba3. It also downgraded the bank's local and foreign-currency deposit ratings to Ba3 from Ba2. Moody's said the bank would benefit from a "moderate likelihood" of parental support from Belgium's KBC Bank.
    Moody's lowered Erste Bank Hungary's baseline credit assessment by two notches to caa1 from b2. The assessment reflects Moody's view that there is a "significant probability" that the bank might require further capital injections from the parent, Erste Group Bank, in the next 12-18 months. Moody's also downgraded Erste Bank Hungary's local and foreign-currency deposit ratings to B2 from Ba3. It said the bank would benefit from a "moderate likelihood" of parental support from Erste Group Bank.
    Moody's lowered MKB Bank's baseline credit assessment by four notches to ca from b3. The assessment reflects Moody's view that the bank will "very likely" require further capital injections from its parent, BayernLB, in the next 12-18 months. Moody's also downgraded MKB Bank's local and foreign-currency deposit ratings to Caa2 from B2. Moody's said the bank would benefit from a "moderate degree" of parental support from BayernLB. It added that the bank's long-term deposit ratings carry a negative outlook, reflecting the likely reduction in parental support in the medium term. BayernLB has agreed to sell MKB by 2015, in order to meet European Commission requirements.

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