Moody's cuts Piraeus Bank Bulgaria

Moody's Investors Service said it downgraded the bank financial strength rating of Piraeus Bank Bulgaria AD to E+ from D-, its long-term deposit rating by three notches to Ba3 from Baa3 and its short-term deposit ratings to not-prime from prime-3.

The outlook is negative.

The downgrade follows an earlier downgrade of the bank's Greek parent bank, Piraeus Bank SA, to E+ with a negative outlook from D+, Moody's said.

The agency noted that the downgrade reflects the high level of funding dependence on, and correlation with, the parent bank.

Although the Bulgarian bank continues to generate adequate profitability - despite reduced growth in business volumes during the first quarter of 2010 - and has sufficient capital buffer to absorb future credit losses, its ratings are affected by the reduced ability of its parent bank to provide additional funding support, Moody's said.

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