Moody's upgrades Budapest Bank, MKB Bank deposit ratings
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Moody's Investors Service on Thursday said it upgraded the long-term local and foreign currency deposit ratings of Budapest Bank and MKB Bank to Baa3 from Ba1 and changed the outlooks to stable from positive, according to a report by state news wire MTI.
The rating actions were driven by the approval on Wednesday of the shareholders of Budapest Bank, MKB Bank, and Takarék Group of a merger between the three lenders to create Hungary's second-largest commercial bank.
Moody's now rates Budapest Bank and MKB Bank based on the combined pro-forma balance sheet of the three lenders that will merge, "incorporating its expectations concerning the financial performance as well as a higher assumption of the likelihood of support by the Government of Hungary...given the merged entity's increased systemic importance", the agency said.
Moody's has assigned Hungary a Baa2 sovereign rating with a stable outlook.
The agency explained the stable outlook on the Budapest Bank and MKB Bank ratings noting that the "significant potential synergies" the merger holds will "only be visible over time" due to the complexity of the transaction.
MKB Bank and Budapest Bank will merge on March 31, 2022 and take the name MKB Bank. Takarék Group will join the merged bank in Q2 2023,
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