Erste Bank: Fitch revises Erste Group Bank outlook to stable, affirms IDR ‘A’

Fitch Ratings has revised Erste Group Bank outlook to stable from positive and affirmed its Long-term Issuer Default Rating (IDR) at 'A' as well as Short-term IDR, Individual at 'F1', 'B/C' and Support ratings at '1'. The Support Rating Floor was affirmed at 'A-'. Simultaneously, the agency has revised the outlook on Erste Bank's subsidiaries, Ceska Sporitelna and Slovenska Sporitelna, to Stable from Positive, as their IDRs, reflecting the strong integration and their strategic importance within the Erste group. Fich has stated that the rating action was caused by mounting challenges in Erste group’s operating environment, as the economic outlook for some CEE countries starts to weaken during 2008. On the positive side, the agency has cited the good progress that the bank has made in generating a sustainable level of operating profits without substantially compromising on risk and capitalisation. Erste has also successfully completed the integration of BCR.

Rating actions on Erste's subsidiaries are as follows:

Ceska Sporitelna:
-Outlook changed to Stable from Positive; Long-term IDR affirmed at 'A'
-Short-term IDR: affirmed at 'F1',
-Individual rating: affirmed at 'B/C',
-Support rating: affirmed at '1'

Slovenska Sporitelna:
-Outlook changed to Stable from Positive;
-Long-term IDR affirmed at 'A',
-Short-term IDR: affirmed at 'F1',
-Individual rating: affirmed at 'C/D',
-Support rating: affirmed at '1'

Erste Bank Hungary:
-Support rating: affirmed at '1'

Erste Bank Croatia:
-Support rating: affirmed at '2'

Our view:
We believe the news is somewhat negative, however given recent downgrades from other agencies we would expect this to be already priced in.