S&P to publish report on FX risk in region's banking sector

Ratings

S&P decided it was worthwhile to make a special report on the subject with the rapid rise of lending in foreign currency in many of the region's countries, including Hungary, S&P associate director Xavier Got, who is preparing the report, told Econews. To offer a better picture of individual countries' relative risks, S&P will start publishing a separate global list based on so-called BICRA -- bank-industry-country risk assessment -- scores in the autumn, Got said. The BICRA list, which will attach countries scores between 2 and 12, with 2 showing the lowest risk, will be updated regularly. Got and his colleague Anette Ess -- S&P banking analysts responsible for the region -- visited Hungary last week to pay a regular visit to Takarékbank - the only Hungarian bank for which S&P prepares a counter-party (issuer) rating. They also visited a Pécs-based savings cooperative for which Takarékbank acts as a central bank, as it does for other savings cooperatives. The analysts met managers of the four Hungarian banks -- CIB Bank, K&H Bank, MKB and OTP -- for which S&P issues so-called public information (pi) ratings, and they also visited Hungary's financial market regulator PSZÁF. S&P started rating Takarékbank in August 2004. Takarékbank has a BB+/Stable/B credit rating from S&P, according to the last rating issued on August 23, 2005. The four banks with pi ratings are among Hungary's five biggest banks, accounting for more than half of Hungarian banks' combined total assets. For this reason they offer a good picture of Hungary's banking sector, Got explained. S&P downgraded both CIB and K&H from A-pi in June, following the lowering of Hungary's long-term sovereign rating from A- to BBB+ earlier in the month. However, no such action was taken in the case of OTP Bank and MKB Bank which were both rated BBBpi anyway. As opposed to a counter-party credit rating requested and paid for by the issuer, the rating agency prepares pi ratings on its own initiative and cost, based only on information published by the issuer or other information publicly available. (Econews)

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