Moody’s upgrades RCB Bank’s outlook to ‘positive’

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Moody’s Investors Service has affirmed RCB Bank’s deposit rating and upgraded its outlook from ‘stable’ to ‘positive’, despite the pandemic-induced fragile economic environment.

RCB Bank said, “the rating by Moody’s has remained unchanged at B1, which constitutes the highest rating among Cypriot banks.”

The bank’s CEO Dr Kirill Zimarin said: “The rating agency has a positive view of RCB Bank’s solid capital levels, with total capital adequacy ratio standing at 21.1% as of 31 December 2020.

“The rating affirmation also reflects the bank’s evolving liability structure leading to increased protection that will be afforded to depositors.”

“This repeated confirmation coupled with the change of our outlook to positive empowers us to continue to support the Cyprus economy at large and to look into the future with confidence.

“Through the implementation of our successful strategy and our investments into innovation and the new digital banking era, we will continue to contribute tangibly and positively in the recovery and growth of Cyprus.”

Bank of Cyprus, Hellenic upgraded to B1

Moody’s also upgraded the Bank of Cyprus and Hellenic Bank long-term bank deposit ratings to B1 from B3, their long-term Counterparty Risk Ratings (CRRs) to Ba3 from B1, their long-term Counterparty Risk Assessments (CRAs) to Ba3(cr) from B1(cr) and their Baseline Credit Assessments (BCAs) and Adjusted BCAs to b3 from caa1.

The rating agency said the outlook on both banks’ long-term deposit ratings is ‘positive’.

As part of the same action, Moody’s has also upgraded Bank of Cyprus’ senior unsecured debt ratings to Caa1, from Caa2, with a positive outlook.

The upgrade of the two banks’ ratings “captures their strengthened standalone credit profiles and, more specifically, their improved solvency, providing increased buffers to the banks to navigate the still challenging operating conditions following the coronavirus pandemic,” the rating agency said.

“In addition, the upgrade to the banks’ deposit ratings also reflects their recent and upcoming MREL (minimum requirement for own funds and eligible liabilities) eligible debt issuances in the coming years, that will change the banks’ liability structure and enhance the buffers that are available to protect depositors.”

Moody’s expects the two banks to continue to improve their solvency profiles, despite potential new NPL formation due to the challenging environment.

It said the ratings could be upgraded in the coming quarters if the banks maintain their strong capital and liquidity, the impact of the coronavirus pandemic on the Cypriot economy is contained, and they manage to improve their asset quality profiles through means including asset sales.