LONDON (AFX) - Standard & Poor's Ratings Services said today it raised to 'A-1' from 'A-2' its short-term ratings on Austria-based Erste Bank der oesterreichischen Sparkassen AG (Erste Bank).
S&P said the rating action reflects its increasing comfort with the integration risk linked to the acquisition of Banca Comerciala Romana, Romania's largest bank. It also reflects the steady progress in the group's profitability, and improvements in the industry and economic risk concerning its operations in Central and Eastern Europe (CEE).
Erste Bank is well positioned to benefit from the higher-than-average growth opportunities in CEE, but is also exposed to the still higher-than-average economic and industry risk, it said.
'These risks are abating as these economies continue maturing, however, and are adequately rewarded by higher returns,' said said S&P credit analyst Bernd Ackermann. Moreover, most of Erste Bank's operations in CEE are in EU member states.
CEE remains the key growth driver for profitability, benefiting from strong loan demand and further efficiency gains, but Erste Bank's domestic operations also demonstrate continued progress albeit from low levels.
Stronger capitalization, further reduction in the economic and industry risk in CEE, and major progress in the integration process and profitability of BCR could be positive for the rating. However, an upgrade to 'A-1+' is unlikely in the short to medium term, it said. newsdesk@afxnews.com cmr/jfr COPYRIGHT Copyright AFX News Limited 2006. All rights reserved. The copying, republication or redistribution of AFX News Content, including by framing or similar means, is expressly prohibited without the prior written consent of AFX News. AFX News and AFX Financial News Logo are registered trademarks of AFX News Limited
S&P said the rating action reflects its increasing comfort with the integration risk linked to the acquisition of Banca Comerciala Romana, Romania's largest bank. It also reflects the steady progress in the group's profitability, and improvements in the industry and economic risk concerning its operations in Central and Eastern Europe (CEE).
Erste Bank is well positioned to benefit from the higher-than-average growth opportunities in CEE, but is also exposed to the still higher-than-average economic and industry risk, it said.
'These risks are abating as these economies continue maturing, however, and are adequately rewarded by higher returns,' said said S&P credit analyst Bernd Ackermann. Moreover, most of Erste Bank's operations in CEE are in EU member states.
CEE remains the key growth driver for profitability, benefiting from strong loan demand and further efficiency gains, but Erste Bank's domestic operations also demonstrate continued progress albeit from low levels.
Stronger capitalization, further reduction in the economic and industry risk in CEE, and major progress in the integration process and profitability of BCR could be positive for the rating. However, an upgrade to 'A-1+' is unlikely in the short to medium term, it said. newsdesk@afxnews.com cmr/jfr COPYRIGHT Copyright AFX News Limited 2006. All rights reserved. The copying, republication or redistribution of AFX News Content, including by framing or similar means, is expressly prohibited without the prior written consent of AFX News. AFX News and AFX Financial News Logo are registered trademarks of AFX News Limited