Fitch downgrades Bank of Cyprus, Popular Bank and Hellenic Bank
2012-07-02 10:55:23
Fitch Ratings has downgraded the Bank of Cyprus (BOC), the Cyprus Popular Bank (CPB) and the Hellenic Bank`s (HB) Long-term Issuer Default Ratings (IDR) and Support Rating Floors (SRF) to `BB` from `BB+` following the sovereign rating downgrade and removed them from Rating Watch Negative (RWN).
The Outlook on their Long-term IDR is Negative in line with that of the sovereign.
According to an announcement, issued by Fitch, the downgrade of BOC, CPB and HB`s support-driven Long-term IDRs reflects Fitch`s assessment that the state`s ability to support its major banks has been reduced, as reflected in Cyprus` sovereign downgrade.
The sovereign downgrade was largely based on the agency`s revised baseline assessment of the potential cost of support the Cypriot banks could need from the state to cope with asset quality deterioration in Greece and Cyprus and reach a core capital ratio of 10%.
Fitch estimates that the Cypriot government may need to provide up to 6 billion Euro of bank support (which includes the1.8 billion Euro to restore CPB`s capital base). Fitch acknowledges that its estimates of the potential losses and capital needs of Cypriot banks are subject to considerable uncertainty and are conservative.