Rating Action Commentary
ֳ Upgrades Romanian UniCredit to 'BBB+' on Parent Upgrade; Outlook Stable
Mon 04 Nov, 2024 - 7:22 AM ET
ֳ - Warsaw - 04 Nov 2024: ֳ has upgraded Romanian UniCredit Bank S.A.'s (UCBRO) Long-Term Issuer Default Rating (IDR) to 'BBB+' from 'BBB'. The Outlook on the Long-Term IDR is Stable. A full list of rating actions is below.
The rating action follows the upgrade of the Long-Term IDR of the bank's parent, UniCredit S.p.A. to 'BBB+'/Positive (see 'ֳ Upgrades UniCredit to 'BBB+'; Outlook Positive' dated 31 October 2024 on ).
UCBRO's Viability Rating is unaffected by the rating actions.
Key Rating Drivers
Support-Driven IDRs: UCBRO's IDRs and Shareholder Support Rating (SSR) reflect a high probability of support from the bank's majority owner, UniCredit, given its inclusion in UniCredit's single-point-of-entry resolution group and the considerable reputational risk for UniCredit from a default of its Romanian subsidiary.
Stable Outlook: The Stable Outlook reflects that on Romania's sovereign rating. UCBRO's Long-Term IDR is at the level of the Romania's Country Ceiling, which is two notches above the Romania's Long-Term Foreign-Currency IDR of 'BBB-'/Stable. The Country Ceiling typically caps a bank's Long-Term Foreign-Currency IDR due to transfer and convertibility risks that might limit a subsidiary's ability to use parental support to service foreign-currency obligations, if needed. Along with our expectation that the Country Ceiling usually moves in tandem with the sovereign rating, this underpins the Stable Outlook on UCBRO's Long-Term IDR.
Strategic Subsidiary: Our support assessment also factors in the strategic importance of UCBRO to the parent and its small relative size meaning any support would be immaterial relative to UniCredit's ability to provide it.
UniCredit's commitment to the Romanian market is underpinned by the ongoing acquisition of Alpha Bank Romania that will ultimately be merged with UCBRO, strengthening the group's position in the market. The common branding and the significant integration between the parent and the subsidiary also positively contribute to our assessment of UniCredit's propensity of support.
Rating Sensitivities
Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade
UCBRO's IDRs and SSR could be downgraded if UniCredit's Long-Term IDR was downgraded or Romania's Country Ceiling was revised down. UCBRO's IDR and SSR could also be downgraded on an adverse change in the resolution strategy of the group with respect to UCBRO.
Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade
An upgrade of UCBRO's IDR and SSR would require both an upgrade of the parent's IDRs and an upward revision of Romania's Country Ceiling.
REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING
The principal sources of information used in the analysis are described in the Applicable Criteria.
Public Ratings with Credit Linkage to other ratings
UCBRO's IDRs are linked to UniCredit's IDRs.
ESG Considerations
The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. ֳ's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. For more information on ֳ's ESG Relevance Scores, visit
/topics/esg/products#esg-relevance-scores.
Additional information is available on
PARTICIPATION STATUS
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.
APPLICABLE CRITERIA
ADDITIONAL DISCLOSURES
ENDORSEMENT STATUS
| UniCredit Bank S.A. | EU Issued, UK Endorsed |