Moody's says that the action reflects on the development of the banks' standalone credit profile, combined with Moody's assessment of the potential benefits and execution challenges of the contemplated three-way merger of the two banks with Magyar Takarékszövetkezeti Bank Zrt. (MTB, unrated group of Hungarian cooperatives) that will create Hungary's second-largest banking group.

The outlook on both banks' long-term bank deposit ratings has been changed to positive from stable, reflecting Moody's anticipation that the combined entity will benefit from a strengthened franchise and improved financial performance following the three-way merger, the timeline for which is expected to be announced later in 2021 whereby the rating agency also takes account of the significant execution challenges associated with such a large and complex corporate transaction.

Rating actions taken by Moody's:

Budapest Bank Rt. (BB): Affirmation of the Ba2 long-term bank deposit  ratings, as well as its b1 Baseline Credit Assessment (BCA), its Ba1(cr)  long-term Counterparty Risk Assessment (CRA) and its Ba1 long-term  Counterparty Risk Ratings (CRRs). The bank's Not Prime short-term bank deposit ratings, CRRs and NP(cr) CRA have also been affirmed. 
MKB Bank Nyrt. (MKB): Upgrade of the long-term bank deposit ratings to Ba2 from Ba3 as well as the BCA to b1 from b2 and its long-term CRA to  Ba1(cr) from Ba2(cr) and long-term CRRs to Ba1 from Ba2. The bank's Not  Prime short-term bank deposit ratings, CRRs and NP(cr) CRA have been affirmed.