Fitch watches Romanian banks

Fitch Ratings, the international rating agency, has placed the ‘BB-‘ long-term ratings of Banca Romana pentru Dezvoltare (Romanian Development Bank-BRD) and UniCredit Romania’s (UCR) on Rating Watch Positive. At the same time the agency has affirmed BRD’s and UCR’s short-term ratings at ‘B’, support ratings at ‘3’ and UCR’s individual rating, which assesses how a bank would be viewed if it were entirely independent and could not rely on external support, at ‘D’. Support ratings deal with the question of whether a bank would receive support from its owners or from the state if it were to get into difficulty. The rating actions follow Fitch’s recent announcement placing Romania’s long-term foreign currency rating of ‘BB-‘ on Rating Watch Positive. Fitch considers the long-term ratings of BRD and UCR to be derived from the potential support, which would be afforded from their foreign parents in the case of need; BRD is 51% owned by Societe Generale, long-term rating ‘AA-‘ and UCR is 99.8% owned by UniCredito Italiano, ‘long-term rating ‘AA-‘. However, due to the potential transfer risk in Romania, which could constrain the ability of these institutions to support their subsidiaries, BRD’s and UCR’s long-term ratings are capped by Romania’s long-term foreign currency rating. ZF