Fitch Ratings has upgraded Hellenic Bank Long-Term Issuer Default Rating to ‘B+’ from ‘B’, the credit rating agency said on Thursday.
In a statement, Fitch said the upgrade follows the completion of the acquisition of certain good assets and liabilities of Cyprus Cooperative Bank Ltd (CCB) and a €150m capital increase.
Under the final terms of the acquisition, HB took on board total assets of €9.3bn comprising mainly loans (€4bn net), Cypriot government bonds (€4.1bn) and cash (€1bn), as well as customer deposits of €8.8bn.
“The ratings of HB reflect its strengthened franchise and market position in Cyprus following the acquisition of CCB, which together with a capital increase, have led to an improved overall financial profile. In particular, the bank’s asset quality metrics have improved, albeit remaining weak by international standards, and longer-term profitability prospects are now better,” Fitch said.
“The acquisition of CCB has strengthened HB’s retail franchise as it has enlarged its market shares in performing loans and deposits to over 20 per cent and over 30 per cent respectively, and shifted the bank’s business mix towards retail customers as opposed to the more corporate and SME focused franchise that HB had pre-acquisition.
“We believe that this will improve HB’s pricing power and would be positive for the bank’s profitability over the longer term. In the shorter term, HB is already benefiting from a downward repricing of the acquired deposit base.”