Following the downgrade of German and Austrian banks yesterday ( June 6 ), ratings agency Moody's has announced cuts to the ratings of subsidiary banks – including Raiffeisen Romania and Erste Group owned Banca Comerciala Romana (BCR). The one notch cut on both banks takes their credit ratings to speculative.

BCR's new rating has a negative outlook, while Raiffeisen Romania's is stable. A deteriorating operating environment in Romania is given as a reason for both downgrades, while BCR's rating was also affected by “the bank's rapidly weakening financial performance.” In both cases, Moody's recognized the support and the commitments of the parent bank's to their Romanian subsidiaries as counterbalancing factors.

Yesterday Moody's downgraded Raiffeisen Bank International and UniCredit Austria by one notch, while Erste Group was downgraded two notches. The ratings actions were on the banks' debt and deposits ratings and standalone credit assessments. The outlook for Raiffeisen was stable for both, UnitCredit Austria had a negative outlook on its debt and deposits rating, due to the negative outlook on the UniCredit parent bank, while Erste Group had a negative outlook on both ratings. According to Moody's, the downgrades “are driven by the difficult European operating environment caused by the prolonged euro area crisis and the deteriorating creditworthiness of certain euro area sovereigns.”

Liam Lever, liam@romania-insider.com