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Moody’s upgrades Unicaja Banco
Moody's Investors Service said it upgraded the following ratings and assessments of Unicaja Banco: (a) Long-term deposit ratings to Ba2 from Ba3; (b) baseline credit assessment (BCA) and adjusted BCA to ba3 from b1; and (c) counterparty risk assessment to Baa3(cr)/Prime-3(cr) from Ba1(cr)/Not Prime(cr).
The outlook on the long-term deposit ratings is positive.
At the same time, the agency affirmed the short-term deposit ratings at Not Prime.
Moody’s said the action was triggered by Unicaja's €688 million capital increase that was completed on June 30. In the agency’s opinion, this transaction has significantly strengthened the bank's loss absorption capacity, with the rating agency's key capital metric – the tangible common equity (TCE) to risk-weighted assets ratio – increasing by more than 260 basis points.
The upgrade also takes into consideration Unicaja's gradually improving profitability from weak levels, underpinned by the ongoing decline in the cost of credit risk, the agency explained. It also takes into account Moody’s expectation of a progressive recovery of Unicaja's subsidiary Espana Duero (unrated), which to date has weighed negatively on Unicaja's profits.
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