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Moody's changes outlook on Budapest Bank, MKB to positive

Ratings

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Moody's Investors Service (Moody's) has taken rating actions on two Hungarian banks, changing the outlooks on the long-term deposit ratings of MKB Bank and Budapest Bank to positive, according to a press release sent to the Budapest Business Journal.

Moody's says that the action reflects on the development of the banks' standalone credit profile, combined with Moody's assessment of the potential benefits and execution challenges of the contemplated three-way merger of the two banks with Magyar Takarékszövetkezeti Bank Zrt. (MTB, unrated group of Hungarian cooperatives) that will create Hungary's second-largest banking group.

The outlook on both banks' long-term bank deposit ratings has been changed to positive from stable, reflecting Moody's anticipation that the combined entity will benefit from a strengthened franchise and improved financial performance following the three-way merger, the timeline for which is expected to be announced later in 2021 whereby the rating agency also takes account of the significant execution challenges associated with such a large and complex corporate transaction.

Rating actions taken by Moody's:

Budapest Bank Rt. (BB): Affirmation of the Ba2 long-term bank deposit  ratings, as well as its b1 Baseline Credit Assessment (BCA), its Ba1(cr)  long-term Counterparty Risk Assessment (CRA) and its Ba1 long-term  Counterparty Risk Ratings (CRRs). The bank's Not Prime short-term bank deposit ratings, CRRs and NP(cr) CRA have also been affirmed. 
MKB Bank Nyrt. (MKB): Upgrade of the long-term bank deposit ratings to Ba2 from Ba3 as well as the BCA to b1 from b2 and its long-term CRA to  Ba1(cr) from Ba2(cr) and long-term CRRs to Ba1 from Ba2. The bank's Not  Prime short-term bank deposit ratings, CRRs and NP(cr) CRA have been affirmed.

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