ON OCTOBER 17, international rating agency Standard & Poor's revised its outlook on Austria-based Erste Group Bank AG - which owns Slovakia’s largest bank, Slovenská Sporiteľňa - from stable to negative, citing the “impact of increased contagion risk from global macroeconomic pressures building in Central and Eastern Europe and Austria”.
Standard & Poor's also revised the outlook on Raiffeisen Zentralbank Osterreich (RZB) and its subsidiaries, including the Slovakia’s Tatra Banka, from stable to negative.
It is noteworthy that S&P has not changed either banks’ high long- and short-term counterparty ratings, which assess their ability to meet obligations to customers.
The central bank has said that these banks operate in Slovakia as independent entities, which keep enough capital and liquidity at their disposal.
“This should not have any impact on Slovak clients,” Vladimír Dohnal, director of Symsite Research, told The Slovak Spectator.
According to him, if a multinational bank with a subsidiary in Slovakia were to become insolvent it would happen in a very civilised way, meaning that either - the more likely scenario - the Slovak government would take over the bank, and its clients in Slovakia would not experience any change, or - the less likely scenario – the clients of a failed bank would be compensated by the Fund for Deposit Protection.
“Clients with loans in the affected bank would have to continue paying them back, while the branches and other assets of the bank would be bought by another bank,” Dohnal concluded.
27. Oct 2008 at 0:00 | Compiled by the Spectator staff from press reports