S&P Downgrades Hungary Banks After Cutting Country Grade to Junk
The rating company cut OTP Bank Nyrt. (OTP), the nation’s largest lender, and its core subsidiary OTP Mortgage Bank to BB+ and B, respectively, from BBB- and A-3 and removed them from CreditWatch negative, S&P said in a statement today. The outlook on both banks is negative, it said.
Hungary lost its investment-grade rating at S&P on Dec. 22, the second downgrade in a month, as a result of weakening policy credibility and concern that oversight institutions are losing independence, S&P said. The International Monetary Fund and European Union suspended financial aid talks last week, accusing the government of trying to rein in the central bank.
The decision “reflects the banks’ exposure to the sovereign through the Hungarian bonds in their securities portfolios, the deteriorating operating environment, and the consequences of unfriendly measures the government has imposed on the Hungarian banking system since 2010,” S&P said.
S&P cut the unsolicited public information ratings on K&H Bank Zrt., a subsidiary of KBC Groep NV, to BBpi from BBB-pi and revised the outlook on Magyar Takarekszovetkezeti Bank Zrt. to negative from stable, according to the statement.
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