Fitch Rating downgraded three Cypriot banks by one notch since finding private capital to cover their capital needs until June will be difficult. Fitch downgraded the three banks to BB+ from BBB- with negative outlook.
A press release issued by Fitch said it has taken rating actions on three Cyprus Banks, namely Bank of Cyprus (BOC ), Marfin Popular Bank (MPB) and Hellenic Bank`s (HB ) Long-term and Short-term Issuer Default Ratings (IDR), Support Rating Floors (SRF), Support Ratings and Viability Ratings (VR) following the sovereign rating action taken on Cyprus. The Outlook on their Long-term IDR is Negative in line with that of the sovereign.
Fitch has downgraded BOC, MPB and HB `s Long-term IDRs and SRFs to `BB+` from `BBB-` and their Short-term IDRs to `B` from `F3` and removed them from Rating Watch Negative (RWN). These actions are the direct consequence of Cyprus` sovereign downgrade as well as Fitch`s reassessment of the potential support available to the banks.
“It is Fitch`s view that while the Cypriot government`s propensity to support banks remains unchanged, its ability to do so has been reduced as reflected in the downgrade of Cyprus` rating. As a result, Fitch has downgraded the Cypriot banks` Support Rating to `3` from `2`, revised their SRF to `BB+` from `BBB- and removed them from RWN. However, Fitch continues to consider in its judgment of support the fact that Cypriot banks could receive support from international authorities in case of need,“ the press release said.
The Negative Outlook on the banks` Long-term IDRs indicates that any further downgrade of Cyprus` sovereign rating and/or any change that reduced the likelihood of international support could lead to a further downgrade of the banks` Long-term IDRs and SRFs, the press release added