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БГ

United Bulgarian Bank Long-Term Rating Raised Considerably by two of the Credit Rating Agencies after UBB Was Acquired by KBC Group

22 June 2017

Fitch Ratings Upgrade the UBB Long-Term Rating by 6 rates to ‘BBB+’ from ‘B+’; Outlook Positive.

S&P Global Raises the UBB Long-Term Rating by 4 rates to 'BB+' from ‘B’, Off Watch; Outlook. Positive

Two of the “Big Three” Credit Rating Agencies – Fitch Ratings and S&P Global – upgraded the ratings of United Bulgarian Bank (UBB) shorty after KBC Group acquired 99.9% of it on 13 June 2017.

Fitch Ratings has resolved the Rating Watch Positive (RWP) on UBB's Long- and Short-Term Issuer Default Ratings (IDRs) and Support Rating (SR). At the same time, Fitch has upgraded UBB’s Long-Term IDR to 'BBB+', which is 6 rates higher than its previous rating 'B+'. This is the highest possible rating for a Bulgarian financial institution. The Positive Outlook on UBB reflects the Bulgarian sovereign rating (BBB-/Positive). UBB’s Long-Term IDR would be even upgraded if Bulgaria's Country Ceiling is revised upwards.

UBB’s higher Rating reflects Fitch’s view of a high propensity of KBC to support its Bulgarian subsidiary, if required. Earlier today they have officially announced: “We believe that UBB’s synergies with the new parent will be strong because the bank provides banking services in one of KBC’s four strategically important markets in central and eastern Europe (together with the Czech Republic, Hungary and Slovakia).” In their official release Fitch mention that KBC has been present in Bulgaria since 2007 through its smaller bank subsidiary CIBANK (about 3.4% market share) and an insurance company DZI Insurance. After the acquisition of UBB (ranked fourth by total assets with about 7.4% market share) KBC achieved its strategic target of a significant market share (about 11%, third place) in Bulgaria.

Standard and Poor’s (S&P Global) have also raised significantly their long-term rating on UBB to 'BB+' from 'B', which is 4 rates higher and is equal to the rating of Bulgaria. The positive outlook reflects that S&P Global could raise the ratings over the next 12 months if they anticipate an improvement in the bank's business profile, in particular, a more focused growth strategy and the successful integration of UBB with KBC's banking operations in Bulgaria. S&P Global have also mentioned that as UBB is a domestic bank operating in Bulgaria only, they would not rate the bank higher than the sovereign. An upgrade of UBB is contingent on an upgrade of Bulgaria. This means that UBB is now rated as a top financial institution in Bulgaria.

S&P Global no longer views UBB as being exposed to contagion risk from its former shareholder National Bank of Greece. They also consider that UBB is now a strategically important subsidiary of the KBC group: Bulgaria is a very important market for KBC and we expect the group to be strongly committed to UBB given its intention to grow significantly in the Bulgarian banking sector.” S&P Global have also added: “Importantly, we believe the ambitions of the KBC group in Bulgaria should gradually strengthen the competitive position of its local operations, with higher growth and higher profitability over time.”

The new CEO of UBB and Country Manager of KBC Group for Bulgaria, Peter Andronov, commented on the significantly increased ratings of the bank: In line with KBC Group’s long-term strategy, UBB, together with CIBANK, will become a top three bank in the Bulgarian market. The ratings upgrade is yet another proof that the acquisition of UBB and the uniting of UBB and CIBANK will be beneficial for both – for the local economy and for the clients. Having in the Group also DZI, one of the major insurance companies in the market, we will expand our bancassurance activities, becoming the largest financial group in Bulgaria.”

 

About KBC (www.kbc.com)

KBC is an integrated multi-channel bank-insurance group, catering mainly for retail, SME and local midcap clients. It concentrates on its core markets of Belgium, Bulgaria, Czech Republic, Hungary, Ireland and Slovakia. Elsewhere around the globe, the group has established a presence in selected countries and regions. KBC’s headquarters are located in Brussels (Belgium). The group employs more than 38 000 people and is listed on Euronext Brussels (ticker symbol 'KBC').

About KBC’s presence in Bulgaria (www.ubb.bg, www.cibank.bg, www.dzi.bg)

In 2007, KBC acquired both CIBANK and DZI Insurance. Collaboration in the field of bank-insurance between DZI and CIBANK has grown significantly in recent years.

On June 13th, 2017 KBC acquired UBB from the National Bank of Greece. After the forthcoming CIBANK-UBB consolidation the new united UBB bank will rank as the third largest bank in Bulgaria in terms of assets, equaling approximately BGN 5.1 billion euro, with a market share of nearly 11%.

CIBANK, UBB and its subsidiary companies, as well as DZI will together grow into the largest banking and insurance group in Bulgaria, one of the main markets for КВС Group. As a result of that КВС Group will also actively penetrate the lease market, as well as the asset management and factoring markets in Bulgaria, by offering its clients the full range of banking services.

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