Moody’s affirms Bank of Cyprus ratings

Moody's announced that it has affirmed all ratings of Bank of Cyprus, with their stable outlook, following the completion of its acquisition of an 80% majority and controlling stake in Russia's Uniastrum Bank.
Moody's comments that the relative size of Uniastrum is not material enough to
impact BOCY's franchise value or financial fundamentals. The ratings of BOCY are A2/Prime-1 foreign currency deposits, A2 senior debt, A3 subordinated debt, Prime-1 commercial paper and C- bank financial strength rating.
In affirming BOCY's ratings, Moody's noted that these are underpinned by the bank's strong position in Cyprus, as one of the largest financial institutions with strong market shares across several business lines, and its dynamic and increasingly valuable franchise in Greece. The ratings are also supported by the bank's currently good financial metrics, primarily its satisfactory earning power and bottom-line profitability, its adequate capitalisation, its strong liquidity position, and good asset quality.
However, Moody's believes that the acquisition of an institution, such as Uniastrum Bank, that is active in a less mature and more volatile operating environment, as evidenced by the ongoing volatility in the Russian markets, does increase BOCY's overall risk profile and could result in potentially higher earnings volatility. In addition, Uniastrum's current weak financial performance necessitates a quick turnaround in order to prevent a dilution of BOCY's overall financial performance, while any severe economic slowdown in Russia could derail the integration and turnaround process of Uniastrum.