Fitch cuts Abanka and affirms Nova Ljubljanska, Kreditna

Fitch Ratings said it downgraded Abanka Vipa dd's long-term issuer default rating to BBB- from BBB and hybrid capital instruments rating to B from BB+, and affirmed its F3 short-term foreign currency issuer default rating.

Fitch said it also affirmed the A- long-term issuer default and F2 short-term foreign currency issuer default ratings of Nova Ljubljanska Banka and Nova Kreditna Banka Maribor, Abanka and Nova Ljubljanska's AA guaranteed notes ratings and Nova Kreditna's BB hybrid capital instruments rating.

The outlook is stable.

Nova Ljubljanska and Nova Kreditna have experienced asset quality deterioration that is putting pressure on capital, but the affirmations reflect the continued potential for shareholder support, Fitch said.

The downgrade reflects Abanka's deterioration in asset quality, driven by exposures to the construction sector and to holding companies where leverage is generally high; high single-name concentrations and pressured profitability, Fitch said.

However, Abanka's rating also considers stable national franchises and reasonable capital and liquidity cushions, the agency said.

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