Fitch Ratings has revised the outlook on Romania’s Banca Comerciala Romana BCR long-term foreign and local currency issuer default ratings (IDR) to negative from stable and affirmed the IDRs at 'BBB+', short-term IDR at 'F2' and support rating at '2'. According to a statement of Fitch, BCR's viability rating (VR) was not affected by the rating actions.

“BCR's IDRs and support rating are driven by the potential support it can expect to receive from its 93.6 percent-owner, Erste Group Bank AG (Erste; A/Negative). As a strategically important subsidiary of Erste, Fitch would normally notch BCR's IDR one notch below that of its parent, implying an IDR for BCR of 'A-'/Negative. However, BCR's rating is constrained by the Romanian Country Ceiling of 'BBB+',” reads the statement.

The revision of the outlook to negative on BCR's long-term IDR is driven by the downgrade of Erste's VR to 'bbb+' from 'a-', according to Fitch.

In the statement, the ratings agency also adds that it “believes that BCR continues to be strategically important to its group despite the weak performance of the Romanian market, in light of Erste's focus on Central and Eastern European (CEE), the strong integration into the group and the track record of support to date”.

BCR posted EUR 61.9 million losses for the first half of 2014, compared to a net profit of EUR 127 million in the same period of 2013, due to larger provisions for non-performing loans (NPL). The bank accelerated its portfolio cleanup in the first half and in July it sold a EUR 227 million batch of NPLs. Romania’s BCR posts EUR 62 mln losses in H1 2014, sells EUR 227 mln worth of non-performing loans.

Irina Popescu, irina.popescu@romania-insider.com