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Moody's takes rating actions on Hungarian banks

Ratings

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Moody's Investors Service on Tuesday said it took rating actions on six Hungarian banks, following the upgrade of Hungary's sovereign rating to Baa2 from Baa3, with a stable outlook, state news wire MTI reports.

Moody's upgraded the long-term backed deposits and long-term backed senior debt ratings of the state-owned Hungarian Development Bank (MFB) to Baa2 from Baa3, with a stable outlook.

The agency upgraded the Counterparty Risk Assessment (CR Assessment) of OTP Bank, Hungary's biggest commercial lender, to Baa1(cr) from Baa2(cr) and initiated a review for upgrade on the bank's Baa1 long-term deposit ratings and its Baa1 long-term Counterparty Risk Ratings (CRR).

Moody's also upgraded the CR assessment of OTP Jelzálogbank, OTP's mortgage unit, to Baa1(cr) from Baa2(cr) and initiated a review for upgrade on its Baa1 long-term CRRs.

The agency also upgraded the long-term CRRs of Erste Bank Hungary, K&H Bank and Raiffeisen Bank to A3 from Baa1 and their long-term CR Assessments to Baa1(cr) from Baa2(cr).

"The upgrade of the backed long-term deposit and long-term senior debt ratings of MFB...reflect their alignment with the sovereign's ratings given the government's full ownership and direct, irrevocable and unconditional guarantee of MFB's liabilities," Moody's said in its rationale for the actions.

The upgrade of the CR Assessments and CRRs of OTP, OTP Jelzálogbank, Erste Bank Hungary, K&H Bank and Raiffeisen Bank "were driven by the sovereign upgrade to Baa2, which has lifted the constraints on these assessments and ratings relative to the government rating", it added.

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