Moody’s cut the rating of Millennium Bank, the Polish bank controlled by BCP, by two levels, downgrading the rating from Baa1 to Baa3, the last level above “junk”.
The financial rating agency also added that the “rating” is under negative monitoring, acknowledging the downgrade of the Polish bank again.
Moody’s justified the decision made on Wednesday, July 20, by announcing Millennium Bank that it estimates capital ratios will fall below minimum capital requirements as a result of new legislation on housing credit moratoriums in Poland.
For the rating agency, the erosion of the capital cushions “significantly weakens the financial profile of Millennium Bank and increases the already existing pressure on its capitalization arising from the legal risks associated with disputes over Swiss franc housing loans.”
Moody’s also notes that, during the monitoring period, it will assess the bank’s short-term ability to restore its capitalization and rebuild its “buffers” in an “operating environment that is becoming more negative and uncertain.” The agency will also appreciate the “ability and willingness” of Poland’s largest shareholder, BCP, to support its branch in case of need.
