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February 4, 2023

Fitch downgrades Banca Romaneasca rating given dependence on NBG

Fitch Ratings on Monday downgraded the Banca Romaneasca long-term debt rating by one notch, to “B-”, with negative perspective, as a result of its heavy dependency of its parent-bank, the National Bank of Greece (NBG) for financing and liquidity. The short-term rating was kept at “B”, that of viability was revised down from “b” to “b-” and that of support was affirmed at level 5. Fitch warns over additional risks being likely with respect to liquidity, if situation in Greece keeps getting worse, as a result of deposit withdrawals. However, fund withdrawals from the Banca Romaneasca was rather low, with the bulk of deposits (over 60 pc), staying within deposit guarantee caps. The Agency notes that the quality of Banca Romaneasca assets is above that of the Romanian banking sector.  While Fitch acknowledges that Banca Romaneasca may receive RON liquidity support from Romanian authorities in case problems arise, given the bank’s market share, significant uncertainties nonetheless regard authorities’ ability to inject capital in the Greek bank’s branches, if need be. Just as uncertain is the ability for enough liquidity being supplied. The negative perspective makes further downgrading likely, if massive deposit withdrawals take place, or if the bank loses the support from its parent bank.

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