Credit rating agency Moody's announced yesterday afternoon that it is reviewing Erste Bank's debt ratings, A1 senior unsecured and B- financial strength, for a possible downgrade, following the announced acquisition of a 61.9% stake in Romanian BCR for EUR 3.75bn. The ratings agency stressed that the acquisition would result in a significant shift in the composition of earnings and the allocation of economic capital, as well as generate a substantial level of goodwill. Romania has a foreign currency debt rating of Ba2 (with a positive outlook) and is considered to have substantially greater risk than the markets where Erste Bank currently operates. At the same time, Moody's acknowledged that the acquisition was consistent with the bank's strategy to expand its CEE presence and that the deal is planned to be funded via a EUR 2.4bn capital increase in 1Q06. The news has had little impact on the stock price of Erste Bank.