S&P cuts Banca Comerciala

Standard & Poor's said it lowered the long-term counterparty credit rating on Banca Comerciala Romana to BB+ from BBB-.

The outlook remains negative.

S&P said the action follows the downgrade on the Republic of Romania (foreign-currency BB+/negative/B).

The downgrade reflects the mounting risks to the country's real economy due to high and rising private sector leverage and the related dependency on an increasingly uncertain external financing channel, the agency said.

Ratings reflect the bank's strategic importance to its parent Erste Group Bank AG (A/negative/A-1), commanding position in the Romanian financial market, and its good liquidity and improving core profitability, the agency said.

Ratings remain constrained by the bank's relatively high level of adversely classified loans, increasing competition, pressurized margins, and high economic and industry risks in the Romanian banking sector, the agency noted.

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