Moody's cuts Slovenian banks

Moody's Investors Service said it downgraded the deposit ratings and standalone credit assessments of three Slovenian banks:

• Nova Ljubljanska Banka: deposit ratings to B2 from Ba2 and standalone credit assessment to Caa1 from B2;

• Nova Kreditna Banka Maribor: deposit ratings to B3 from Ba2 and standalone credit assessment to Caa1 from B1; and

• Abanka Vipa: deposit ratings to Caa1 from Ba3 and standalone credit assessment to Caa2 from B2.

The outlooks are negative.

Moody's said the downgrades reflect the deterioration of the banks' standalone financial fundamentals, including rapid problem loan formation and the erosion of their risk-absorption capacity, as well as the rating agency's views of the willingness of the government to provide support, balanced against a recognition of the fiscal challenges of supporting multiple banks and the government's preference to find private sources for recapitalization.

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