Moody’s downgrades Piraeus Bank Bulgaria rating

Follows downgrade of Piraeus Bank of Greece

Moody's Investors Service has downgraded the long-term local currency deposit rating of Piraeus Bank Bulgaria AD (PBB) to Baa3 from Baa2. At the same time, the rating agency has confirmed the bank's short-term local currency deposit rating at Prime-3, and its long- and short-term foreign currency deposit ratings at Baa3/Prime-3. The outlook on all deposit ratings is negative.
PBB's D- Bank Financial Strength Rating (BFSR) of Ba3, is not affected.
This rating action follows Moody's decision to downgrade the BFSR of Greek parent bank, Piraeus Bank SA, to D+ (negative outlook) from C- . The parent bank's D+ BFSR translates into a BCA of Baa3.
PBB's Baa3 long-term local currency deposit rating incorporates a three-notch uplift from its BCA of Ba3, reflecting Moody's assessment of a high probability of support from its parent bank.
"Moody's assumption of a high probability and strong willingness of parental support to PBB is underpinned by (i) the strategic importance of the Bulgarian operations to Piraeus Bank Group, (ii) the high funding and operational support from the parent bank to the Bulgarian subsidiary, since inception, and (iii) PBB's small size compared to the group's balance sheet," said Elena Panayiotou, Moody's lead analyst for Bulgarian banks.
PBB's long-term foreign currency deposit rating of Baa3 is currently at the same level as its long-term local currency deposit rating and is no longer constrained by the foreign currency deposit ceiling for Bulgaria. Any future downward movement in PBB's local currency rating would therefore prompt a movement in the bank's foreign currency deposit rating.