UBB’s long-term rating ‘A-‘ is higher than those of Bulgaria

Fitch Rating Agency has upgraded the long-term rating of United Bulgarian Bank (UBB) for a second time this year, following the bank’s acquisition by the Belgian financial group KBC. Thus, within a couple of months, UBB’s rating has been raised with the unprecedented 7 grades – from ‘B+’, through ‘BBB+’ up to its current highest grade in the 25-year history of United Bulgarian Bank and the Bulgarian banking system, namely ‘A-‘.

This happenеd several days after the same agency’s announcement on 1st of December for upgrade of Bulgaria’s long-term IDR rating from ‘BBB-‘ to ‘BBB’. At the same time the country ceiling for Bulgaria was raised from ‘BBB+” to ‘A-‘. The upgraded long-term rating of UBB means in practice that it now exceeds the sovereign one by one grade.

The rating agency has also upgraded the Support Rating (SR) from ‘2’ to ‘1’, the short-term Issuer Default Rating (IDR) – from ‘F2’ to ‘F1’, and has changed the outlook from „Positive“ to „Stable“.

The upgraded long-term IDR and SR ratings of UBB reflect the opinion of Fitch for availability of potential support from the parent company – KBC Bank (with rating ‘A’, Positive Outlook). The stable outlook reflects that of the Bulgarian country.

In its press release to the media the agency announces that UBB is based in the region of Central and Eastern Europe, considered by KBC of strategic importance. In their assessment they also note the strong synergies between the bank and its parent company. It has also been taken into account that UBB is almost fully owned by KBC, as well as the high level of management and operational integration. „In our opinion, whatever need of support UBB might have it will be relatively small for the parent bank’s capacity to provide. This indicates the owner’s solid credit portfolio and the Bulgarian company’s relatively small size“, the rating agency representatives added.

The Chief Executive Officer of United Bulgarian Bank and Country Manager of КВС Group for Bulgaria, Peter Andronov, has made some comments on the occasion of the considerable upgrade of the bank’s rating: „The unprecedented upgrade of UBB’s rating is a clear indicator of the institution’s stability after its acquisition by the Belgian financial group KBC. Gradually and at a quick pace we are transforming the new united bank into an extremely reliable and significant financial partner of European-type quality. Having won the confidence and positive assessment of Fitch top rating agency I believe that with the forthcoming legal merger the trust of UBB and CIBANK’s clients will also be worthwhile".