Moody's cuts Hungarian banks to A2

Moody's Investors Service said it downgraded to A2 the long-term foreign-currency deposit ratings of seven Hungarian banks.

The actions have been prompted by the Dec. 22 downgrade of Hungary's sovereign ratings to A2 for its local- and foreign-currency government bond ratings and its foreign-currency bank deposit ceiling. Hungary's Aa1 foreign-currency country ceiling for bonds, the Aaa local-currency deposit ceiling and the Aaa local-currency country ceiling were not affected by the downgrade.

The foreign-currency long-term bank deposit ratings of seven Hungarian banks - Budapest Bank, Kereskedelmi & Hitel Bank, MKB Bank, OTP Bank, OTP Jelzalogbank, Central-European International Bank and Hungarian Development Bank - have been downgraded to A2 from A1. The foreign-currency short-term bank deposit ratings of these banks have been affirmed at P-1.

The A2/prime-1 foreign-currency long-term and short-term bank deposit ratings of FHB Bank were placed on review for possible downgrade, pending the outcome of the potential privatization of the bank recently announced by the Hungarian government. A possible downgrade reflects the fact that the A2 foreign-currency bank deposit rating now is placed at the foreign-currency bank deposit ceiling for Hungary and cannot move any higher.

The A2 long-term foreign-currency deposit rating of Erste Bank Hungary was not affected by the action on Hungary's foreign-currency bank deposit ceiling.

OTP Bank's foreign-currency debt ratings of A1 for senior and A2 for subordinated debt, Hungarian Development Bank's Aa1 foreign-currency senior unsecured debt ratings and MKB Bank's foreign-currency debt ratings of Aa3 for senior and A1 for subordinated debt have not been affected by the sovereign downgrade given that Hungary's country ceiling for foreign-currency debt obligations of Aa1 was not affected by the rating action, Moody's said.

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