Moody's cuts Slovenian banks

Moody's Investors Service said it downgraded the debt and deposit ratings of three Slovenian commercial banks following the one-notch downgrade of the Slovenian government's sovereign debt rating to A1 with negative outlook, from Aa3.

The affected commercial banks are Nova Ljubljanska banka, Nova Kreditna banka Maribor and Abanka Vipa.

In addition, Moody's also downgraded the issuer and senior unsecured ratings of SID Banka to A1 with a negative outlook from Aa3 in line with the sovereign rating action.

At the same time, the stand-alone bank financial strength rating of Abanka was downgraded to E+, mapping to B1 on the long-term scale, with a stable outlook, from D-, mapping to Ba3 on the long-term scale.

In addition, Moody's said it also downgraded the government-guaranteed debt rating of Factor banka to A1 from Aa3 with a negative outlook.

Moody's said the key driver of these actions is the downgrade of the Slovenian government's sovereign rating to A1 with a negative outlook from Aa3. The downgrade implies that the government has less financial flexibility and would likely face more difficult policy choices if multiple institutions were to need its financial support at the same time.

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