Fitch: Bank Rating Changes Returned to Lower Levels in 3Q15
OREANDA-NEWS. Fitch Ratings says in a new report that the number of bank rating changes returned to more average levels in 3Q15, after significant downgrades in 2Q15 driven mainly by support revisions. Changes were mainly driven by rating actions on banks' Viability Ratings (VRs) in developed markets (DM) and to a lesser extent in emerging markets (EM). Europe continues to make up most rating changes and all seven VR downgrades in DM were in Europe.
Reduced support expectations factored into DM ratings in 2Q15 mean that VRs now drive even more of DM ratings. State support expectations remain more important in EM bank ratings, where VRs drive less than 60% of Long-term Issuer Default Ratings (IDR). Fitch does not expect a material change in support propensity in the medium term for EM or DM banks.
Sovereign credit profiles had limited effect on bank ratings in 3Q15. However, persistently low oil prices and a deterioration in Oman's fiscal position contributed to the downgrades of five Omani banks' Long-Term IDRs, from weaker expected ability of the sovereign to support the banks. The revision of the Outlook on Saudi Arabia's sovereign rating to Negative from Stable was mirrored in four Saudi banks' Outlooks.
Multi-notch rating changes were limited to Ukrainian and Andorran banks. Two Andorran banks were downgraded by three notches, while another was downgraded by two notches, on reassessment of the operating environment. In Ukraine, the completion of external debt restructurings was the key driver behind upgrades of two banks' ratings to 'CCC' from RD.
A full review of global bank rating actions taken by Fitch in 3Q15 is available by clicking on the link above.
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