Moody’s Investors Service on Tuesday said it downgraded the Russian and Ukrainian units of Hungary’s OTP Bank and put their ratings on review for further downgrade.
Moody’s downgraded to Ba2 from Ba1 the long-term local and foreign currency deposit ratings of Russia’s OJSC OTP Bank and placed the ratings on review for further downgrade.
The actions followed Moody’s recent announcement that it lowered OTP Bank’s positioning within the D+ bank financial strength rating (BFSR) category to a standalone rating of Ba1 from Baa3 on the long-term scale, and maintained its BFSR on review for downgrade.
"OTP Russia’s Ba2 deposit ratings continue to incorporate a very high probability of parental support from OTP Bank, and OTP Russia consequently receives a one-notch uplift from its Ba3 standalone credit strength," Moody’s said. "At the same time, there remains the risk that the Russian market could lose its attractiveness, such that OTP Russia may be considered non-strategic at a future date," it added.
Moody’s downgraded the Ba1 long-term local deposit rating of OTP Bank’s Ukrainian unit (OTBU) to Ba2 and simultaneously placed it on review for downgrade. The D- Bank’s Financial Strength Rating, the B3 long-term foreign currency deposit rating, Not-Prime short-term local and foreign currency deposit ratings remained unchanged along with a stable outlook, Aa1.ua National Scale deposit Rating remained unchanged as well but carries no specific outlook, the ratings agency said.
Moody’s said OTBU, too, enjoys a "very high probability of parental support", but added that the unit could also become "non-strategic" in the future if the market loses its attractiveness.