Fitch Ratings has also upgraded BCR’s viability rating (VR) to ‘bb’ from ‘bb-‘, and affirmed the VRs of Banca Transilvania at ‘bb’ and UniCredit Bank at ‘bb-‘.
According to Fitch, the upgrade of BCR’s VR reflects the bank’s improving asset quality based on strong execution of the non-performing loans (NPLs) resolution strategy put in place in 2014, and strong capitalization, particularly in view of reduced levels of uncovered NPLs.
“The asset quality of Romanian banks remains weak but has improved following NPL sales and work-outs, contributing to an overall decline of the non-performing exposures (NPEs) ratio of the sector to 11.3% at end-1H/2016,” Fitch said.
The Romanian parliament approved a version of the Swiss franc conversion law which contained additional amendments to the one last seen and commented on by Fitch. One of the changes introduced gives borrowers who have already accepted voluntary conversion of their Swiss franc loans with certain discounts offered by banks, the option to ask for a new conversion at historical exchange rates.
“Although it is too early to assess the cost upon implementation, Fitch believes that there will be no financial impact on the VRs of BCR and UniCredit Bank as these banks have no Swiss franc-denominated retail lending, and that the impact will be manageable for Banca Transilvania given the size of existing provisions for legal risks and the availability of its capital cushion to absorb the potential additional cost,” Fitch said.