Moody's Investors Service has downgraded long-term deposit ratings of Bank Handlowy to Baa3 from Baa1. Moody’s has also downgraded shortterm rating to Prime-3, from Prime 2, and affirmed the D+ standalone bank financial strength rating. All of Bank Handlowy's ratings carry a stable outlook.
We believe the news should have been expected following rating action on parent company. Citibank’s standalone BFSR rating had been downgraded to D+/ baa3, from C-/baa1. Bank Handlowy does not use funding support from parent bank given its loans-to-deposit ratio of 66.3% and capital adequacy ratio of 16.0% in 1Q12. We expect the news to have a neutral trading impact.