S&P raises Zagrebacka Banka

Standard & Poor's said it raised its long-term counterparty credit rating on Zagrebacka Banka DD (ZB) to BBB from BBB-. The outlook is stable.

S&P said the upgrade reflects ZB's strategic importance to and continued integration with, its majority owner, UniCredito Italiano SpA (A+/negative/A-1) and the benefits derived from UniCredito's expertise and technology in core business areas.

The agency noted the ratings are also underpinned by the bank's leading customer franchise in the Croatian banking market resulting in adequate financial performance, good capitalization and a strong funding base.

The ratings remain constrained by economic, business and competitive risks in Croatia to which ZB is inherently exposed, declining core profitability and heightening credit risk stemming from unseasoned new loans, limitations in the legal system and an increasing exposure to the higher lending risk in Bosnia and Herzegovina, S&P added.

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