Fitch affirms Erste Bank Hungary 'BBB+' rating; outlook stable
Fitch Ratings on Friday said it affirmed Erste Bank Hungary's 'BBB+' long-term issuer default rating with a stable outlook, according to a report by state news wire MTI.
Fitch said the lender's ratings are based on potential support available from its parent, Austria's Erste Group, which holds a 70% stake in Erste Bank Hungary.
"In Fitch's view, the parent has a high propensity to support its Hungarian subsidiary because of its strategic importance to Erste's central and eastern European region network and franchise," it added.
Fitch noted that it caps Hungarian banks' long-term issuer default ratings one notch over the sovereign rating, which is 'BBB'. The practice reflects "the country risks they face, in particular, the record of state interference in the banking system", it added.
Erste Bank Hungary's long-term issuer default ratings could be downgraded if Hungary is downgraded, if Erste Group is downgraded by two notches or more, or if there is a "material weakening" of the parent bank's propensity to support its Hungarian unit, Fitch said.
Erste Bank Hungary's ratings could be upgraded if Hungary's sovereign rating is bumped up or if there is a positive change in Fitch's assessment of country risks, it added.
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