Bloomberg News

Komercni Banka Cut at Moody’s on Earnings, Parent Lender Risk

June 26, 2012

Komercni Banka AS (KOMB) had its bank financial-strength rating cut at Moody’s Investors Service, which cited a Czech economic slowdown and risks of capital transfers to the lender’s owner, Societe Generale SA.

Moody’s downgraded the Prague-based company’s standalone bank financial strength rating to C-/baa1 from C/a3 in a report late yesterday.

The economic slowdown will outweigh the bank’s “strong capital position” with a 13.6 percent Tier 1 ratio at the end of March 2012, according to the report. The downgrade follows a cut in the parent company’s ratings on June 21, Moody’s said.

“The weakening operating environment will constrain earnings and exert pressure on the bank’s problem loans,” the ratings company said. SocGen’s deteriorating credit profile poses a “risk of capital being up-streamed to the parent, which would directly affect Komercni Banka’s capital cushion,” Moody’s said.

The lender rose 0.7 percent today to 3,405 koruna by 11:52 a.m. in Prague, snapping a 3.4 percent drop in the previous two sessions.

The ratings provider confirmed Komercni Banka’s long-term local and foreign-currency deposit ratings of A2 and its Prime-1 short-term local and foreign-currency deposit grade.

To contact the reporter on this story: Krystof Chamonikolas in Prague at kchamonikola@bloomberg.net

To contact the editor responsible for this story: Gavin Serkin at gserkin@bloomberg.net


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