Moody's cuts Hungarian banks

Moody's Investors Service said it downgraded the stand-alone ratings of four Hungarian banks - K&H Bank, FHB Mortgage Bank, Erste Bank Hungary and MKB Bank - and lowered the parental support uplift in the deposit ratings for two foreign-owned banks, K&H Bank and Budapest Bank.

The outlook is negative.

Moody's said the actions reflect three major issues: (a) asset quality has deteriorated quicker than initially expected, which will likely continue throughout 2012; (b) increasing pressure on profitability and capital, partly due to the early repayment of foreign currencies mortgages; and (c) a risk of a weakening in the parent banks' commitment to their Hungarian operations.

Moody's said it confirmed the local currency and foreign currency deposit ratings for OTP Bank Nyrt and OTP Mortgage Bank, as well as the foreign currency debt ratings of OTP Bank Nyrt, with a negative outlook assigned to all ratings.

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