DBRS Assigns Issuer Rating of A (low), with a Positive Trend, to Ceskoslovenská Obchodná Banka, a.s.

DBRS Ratings Limited (DBRS) has today assigned an A (low) Issuer Rating to Ceskoslovenská Obchodná Banka, a.s., a subsidiary of KBC Bank, based in Slovakia (CSOB SK or the Bank). DBRS also assigned A (low) Long Term Senior Debt and Long Term Deposit ratings and R-1 (low) Short Term Debt and Short Term Deposit ratings. The trend on the Long Term ratings is Positive while the Short Term ratings carry a Stable trend.

CSOB SK’s ratings reflect DBRS’s view that, in case of need, the Bank is highly likely to receive support from its parent KBC Bank, whose Issuer Rating is A, with a Positive Trend. Reflecting the importance of the Slovak entity to the wider KBC Group and in line with DBRS’s approach, CSOB SK’s Long Term Ratings are one notch below those of KBC Bank. The Positive Trend on CSOB SK’s Long Term ratings is in line with the Trend on its parent’s Long Term Ratings.

KBC has a long-standing strategic presence in CEE countries, which represent four out of five KBC’s core markets outside Belgium. Slovakia is one of KBC Group’s core markets and CSOB SK is the main KBC Group entity in the Slovak market, which underpins DBRS’s assessment that support would be provided to CSOB SK by the parent, if needed. Supporting this view is CSOB SK’s well established, primarily retail franchise in Slovakian banking, where it holds an 11% market share. In recent years the Bank has been consistently generating earnings, positively contributing to the performance of its direct parent and KBC Group. In DBRS’s view CSOB SK’s balance sheet is solid with relatively low impaired loans, a satisfactory funding profile, which is largely reliant on domestic customer deposits, and good levels of capital. At end-2016, the Bank had consolidated total assets of EUR 8.5 billion and EUR 0.7 billion of equity. CSOB SK is 100%-owned by KBC Bank NV.

RATING DRIVERS

CSOB SK’s ratings are driven by the ratings of its parent – KBC Bank. Any change in the Long Term ratings of KBC Bank or the Trend on those ratings would impact CSOB SK. CSOB SK’s ratings could also be negatively affected by DBRS’s assessment that the likelihood of CSOB SK obtaining support from KBC Bank, in case of need, has diminished.

Notes:
All figures are in Euros unless otherwise noted.

The principal applicable methodology is the Global Methodology for Rating Banks and Banking Organisations (July 2016). Other applicable methodologies include the DBRS Criteria: Support Assessments for Banks and Banking Organisations (March 2017), DBRS Criteria: Rating Bank Capital Securities – Subordinated, Hybrid, Preferred & Contingent Capital Securities (February 2017), DBRS Criteria: Guarantees and Other Forms of Support (February 2017) and Critical Obligations Rating Criteria (February 2017) These can be found can be found at: http://www.dbrs.com/about/methodologies

The sources of information used for this rating include SNL Financial, company disclosures, National Bank of Slovakia and the European Central Bank. DBRS considers the information available to it for the purposes of providing this rating to be of satisfactory quality.

DBRS does not audit the information it receives in connection with the rating process, and it does not and cannot independently verify that information in every instance.

Generally, the conditions that lead to the assignment of a Negative or Positive Trend are resolved within a twelve month period. DBRS’s outlooks and ratings are under regular surveillance

For further information on DBRS historical default rates published by the European Securities and Markets Authority (“ESMA”) in a central repository, see:
http://cerep.esma.europa.eu/cerep-web/statistics/defaults.xhtml.

Ratings assigned by DBRS Ratings Limited are subject to EU regulations only.

Lead Analyst: Tomasz Walkowicz – Vice President - Global FIG
Rating Committee Chair: Elisabeth Rudman - Managing Director, Head of EU FIG, Global FIG
Initial Rating Date: May 18, 2017
Most Recent Rating Update: -

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