December 8, 2014 / 9:03 AM / 3 years ago

Fitch: Pressure on Bank Ratings in 2015 on Expected Support Changes

(The following statement was released by the rating agency) Link to Fitch Ratings' Report: EMEA Financials Bond Market Monitor here LONDON, December 08 (Fitch) Fitch Ratings says prospects for EMEA bank ratings remain challenging in 2015 as Outlooks and Watches on Fitch-rated entities in the sector retain a negative bias. Many EU banks face potential downgrade pressure due to expected changes in state support under EU Bank Recovery and Resolution plans. The trend to build up bail-in buffers and Basel 3 offers structural support to senior and regulatory capital issuance, but weak economic growth and generally solid liquidity profiles mean that banks can wait if market conditions are unfavourable. The volume of bank bond downgrades doubled in 9M14 yoy, led by banks in Austria, the UK, and Portugal (following the demise of Banco Espirito Santo). Changes to systemic state support assumptions were behind Austrian bank downgrades, which accounted for the majority (31%). Overall, downgrades affected 5.7% of financial-sector bonds outstanding in 9M14, down 0.1pp from the level in 2013. Issuance in 10M14 increased 8% yoy, boosted by a doubling in subordinated bonds on tightening spreads. The rise more than offset an 18% fall in covered bond volume, which dropped to its lowest level in at least 10 years. Issuance of additional Tier 1 (AT1) bonds surged to EUR45bn in 10M14 - 2.5x the 2013 total - helped by a record monthly volume of EUR11bn in September, led by UK banks. More information is available in the report, 'EMEA Financials Bond Market Monitor', which is available at www.fitchratings.com or by clicking the link above. Contact: Michael Larsson Director +44 20 3530 1260 Fitch Ratings Limited 30 North Colonnade London E14 5GN Monica Insoll Managing Director +44 20 3530 1060 James Longsdon Managing Director +44 20 3530 1076 Media Relations: Elaine Bailey, London, Tel: +44 203 530 1153, Email: elaine.bailey@fitchratings.com. Additional information is available at www.fitchratings.com. ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

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