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Moody’s puts nine Slovak financial institutions on downgrade watch

International rating agency Moody’s on May 26 placed the ratings of nine Slovak financial institutions on review for possible downgrade

International rating agency Moody’s on May 26 placed the ratings of nine Slovak financial institutions on review for possible downgrade

The SITA newswire reported that the affected institutions are: Slovenská Sporiteľňa, Všeobecná Úverová Banka, Tatra Banka, Unicredit Bank Slovakia, Československá Obchodná Banka, Privatbanka, OTP Banka Slovensko, and companies Tatra Leasing and Home Credit Slovakia.

Moody’s is revising its ratings due to the probability that, with the impact of the global economic crisis, the number of companies unable to pay their debts will increase and that the Slovak banks could therefore record increased losses in their loan portfolios. Another negative factor, according to Moody’s, is growing unemployment and the fall of real estate prices which could result in losses in the banks’ retail portfolios, SITA reported.

Moody’s also pointed to the ability of the Slovak government and the central bank to support the local financial system. The Slovak government has not set up a support programme for the banking sector, but has promised to help banks in case of need.

Moody’s will also evaluate the probability and willingness of their foreign owners to provide support to local banks, SITA wrote.

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