Moody’s Investors Service revised higher the rating results for banks in Cyprus as part of the application of its refined joint default analysis (JDA) and updated bank financial strength rating (BFSR) methodologies.
For Bank of Cyprus, the BFSR has been changed to C- from D+. For Marfin Popular Bank, the BFSR has been changed to C- from D+. The BFSR for Hellenic Bank has been changed to D+ from D while for Kommunalkredit International Bank, a BFSR of C has been assigned.
In the case of the Global Local Currency Deposit Ratings, Moody’s upped the rating of Bank of Cyprus to A2/Prime-1. In the case of MPB, Moody’s assigned a A3/Prime-1 rating. A Baa2/Prime-2 rating has been assigned to Hellenic Bank while Kommunalkredit International Bank was assigned Aa3/Prime-1 rating.
In the case of Foreign Currency Deposit Ratings, Bank of Cyprus has been upgraded to A2/Prime-1 from Baa1/Prime-2. Moody’s also upgraded to A2 from Baa1 the Foreign Currency Debt Rating for senior obligations while for the Foreign Currency Debt Rating for subordinated debt obligations BOCY has been upgraded to A3 from Baa2. The Commercial Paper Rating of Bank of Cyprus has been upgraded to Prime-1 from Prime-2.
Moody’s also upgraded the Foreign Currency Deposit Ratings of Marfin Popular Bank to A3/Prime-1 from Baa1/Prime-2. The Foreign Currency Debt Rating of MPB for senior obligations has been upgraded to A3 from Baa1. The Foreign Currency Debt Rating of Marfin Popular Bank for subordinated debt obligations has been upgraded to Baa1 from Baa2.
In the case of Hellenic Bank Public Company Ltd, Moody’s said the  Foreign Currency Deposit Ratings remain unchanged at Baa2/Prime-2. The Commercial Paper Rating of HB remains unchanged at Prime-2.
In the case of Kommunalkredit International Bank Ltd., the Foreign Currency Issuer Ratings remain unchanged at Aa3/Prime-1 and the Commercial Paper Rating remains unchanged at Prime-1.
All ratings are assigned stable outlooks, Moody’s said.
BFSRs evaluate the stand-alone or intrinsic financial strength of banks without reference to external support factors. BFSRs are the starting point of Moody’s bank credit analysis, and are an important determinant of Moody’s bank deposit and debt ratings.
Moody’s then uses its JDA methodology to incorporate the potential for external support into a bank’s local currency deposit rating. The potential for external support can reduce the riskiness of a bank’s deposit and debt obligations; however, such support is often uncertain. Moody’s uses conservative support assumptions and a limited number of support levels to ensure that sufficient weight is given to a bank’s intrinsic financial strength in its bank deposit and debt ratings.
Moody’s uses deposit ratings to determine bank debt ratings based on its notching guidelines for bank securities. Ratings for foreign currency obligations are determined after considering Moody’s country ceilings for foreign currency ratings.
The methodologies are being implemented country by country, with results being announced on a weekly basis. Results for those banks with a parent bank located in another country where the methodologies have not yet been implemented will be concluded at the same time as the parent.
