Moody’s ups Bank of Cyprus, Hellenic Bank

Moody's Investors Service said it upgraded Bank of Cyprus PCL’s long-term local and foreign currency deposit ratings to Caa2 from Caa3 and Hellenic Bank PCL's to Caa1 from Caa2.

The banks' Not-Prime short-term local and foreign currency deposit and commercial paper ratings were affirmed.

These actions were driven by the upgrade of the banks' standalone baseline credit assessments (BCA) to caa2 from caa3 reflecting the improvement in the operating environment, which led to the improvement in the macro profile for Cyprus to “weak” from “very weak+,” as well as the banks' improved profitability, asset quality, capitalization and funding.

Moody's noted that the ratings of these two banks remain at low levels, reflecting, in particular, the vulnerability of their capital buffers to the high stock of non-performing loans (NPLs).

The outlook on the long-term deposit ratings for both banks remains positive, reflecting the agency's view that the banks' asset quality and capitalization will continue to improve, supported by the economic recovery in Cyprus.

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