ֳ

Rating Action Commentary

ֳ Takes Rating Actions on 3 UniCredit and Intesa CEE Subsidiaries

Fri 05 May, 2017 - 9:51 AM ET

ֳ-Warsaw/London-05 May 2017: ֳ has downgraded the Long-Term Issuer Default Ratings (IDRs) of Bulgarian-based UniCredit Bulbank AD (Bulbank) and Romanian-based UniCredit Bank S.A. (UCBRO) to 'BBB-' from 'BBB'. The Outlooks are Stable. ֳ has also affirmed the Long-Term IDR of Hungary-based CIB Bank Zrt (CIB) at 'BBB-' and revised the Outlook to Stable from Negative. The banks' Viability Ratings are not affected by these rating actions. A full list of rating actions is at the end of this commentary.

The rating actions follow the recent downgrades of the Long-Term IDRs of the Italian UniCredit S.p.A. (UniCredit) and Intesa Sanpaolo S.p.A. (IntesaSP) to 'BBB' from 'BBB+' (for more details see 'ֳ Downgrades 5 Italian Banks Following Sovereign Downgrade' dated 27 April 2017 at ).

KEY RATING DRIVERS
IDRS AND SUPPORT RATINGS
The three banks' Long- and Short-Term IDRs and Support Ratings are based on potential support available from their respective parents - UniCredit (for Bulbank and UCBRO) and IntesaSP (for CIB).

Bulbank and UCBRO are rated one notch below UniCredit. The downgrades of their IDRs reflect the recent downgrade of UniCredit.

ֳ has revised the difference between the ratings of CIB and IntesaSP to one notch from two notches and affirmed CIB's IDRs. This takes into account the parent's confirmed commitment to the Hungarian market reflected, among other things, by the track record of supporting the subsidiary despite its weak performance when the operating environment was difficult. The recent economic stabilisation and CIB's gradually improving, albeit still modest, performance should further improve the parent's support propensity.

The Stable Outlooks on the banks' Long-Term IDRs are in line with those on their respective parents.

The affirmation of the three banks' Support Ratings at '2' reflects ֳ's opinion that their respective parents will continue to have a strong propensity to support these subsidiaries because the central and eastern European region remains strategically important for each of them. The small size of these subsidiaries relative to their respective parents also limits the cost of any potential support that may be required.

RATING SENSITIVITIES
IDRS AND SUPPORT RATING
The support-driven ratings of all three banks are sensitive to the changes in their parents' ratings or to a weakening of propensity of the parents to provide support, which ֳ views as currently unlikely.


The rating actions are as follows:

Bulbank
Long-Term IDR: downgraded to 'BBB-' from 'BBB'; Outlook Stable
Short-Term IDR: downgraded to 'F3' from 'F2'
Support Rating: affirmed at '2'
Viability Rating: 'bb', unaffected

UCBRO
Long-Term IDR: downgraded to 'BBB-' from 'BBB'; Outlook Stable
Short-Term IDR: downgraded to 'F3' from 'F2'
Support Rating: affirmed at '2'
Viability Rating: 'bb-', unaffected

CIB
Long-Term IDR: affirmed at 'BBB-', Outlook revised to Stable from Negative
Short-Term IDR: affirmed at 'F3'
Support Rating: affirmed at '2'
Viability Rating: 'b', unaffected

Primary Analyst (Bulbank)
Michal Bryks, ACCA
Director
+48 22 338 6293
ֳ Polska SA
Krolewska 16,
00-103 Warsaw

Primary Analyst (UCBRO)
Artur Szeski
Senior Director
+48 22 338 6292
ֳ Polska SA
Krolewska 16,
00-103 Warsaw

Primary Analyst (CIB)
Olga Ignatieva
Senior Director
+7 495 956 69 06
ֳ CIS Ltd
26 Valovaya Street
Moscow 115054

Secondary Analyst (Bulbank, CIB)
Agata Gryglewicz
Associate Director
+48 22 330 6970

Secondary Analyst (UCBRO)
Ioana Sima
Associate Director
+44 20 3530 1736

Committee Chairperson
Alexander Danilov
Senior Director
+7 495 956 2408

Media Relations: Peter Fitzpatrick, London, Tel: +44 20 3530 1103, Email: peter.fitzpatrick@fitchratings.com.

Additional information is available on

Applicable Criteria
Global Bank Rating Criteria (pub. 25 Nov 2016)

Additional Disclosures
Dodd-Frank Rating Information Disclosure Form
Solicitation Status
Endorsement Policy


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The rated entity (and/or its agents) or, in the case of structured finance, one or more of the transaction parties participated in the rating process except that the following issuer(s), if any, did not participate in the rating process, or provide additional information, beyond the issuer’s available public disclosure.

Solicitation Status

The ratings above were solicited and assigned or maintained at the request of the rated entity/issuer or a related third party. Any exceptions follow below.

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