S&P Global Ratings on March 9 revised its outlook on the International Investment Bank (IIB) to negative from stable, while affirming its long- and short-term foreign and local currency ratings at 'A-/A-2'.

The negative outlook reflects the risks of a material erosion of the IIB's shareholder base due to the announced withdrawal of several key shareholders (including Romania, with a 6% stake)," the rating agency explains.

"If executed, we believe the reduced shareholder base will severely hit the bank's policy role, raising concerns regarding institutional depth and requiring significant changes to its fundamental strategy to avoid depleting policy relevance," S&P explains.

The rating agency believes that the withdrawal process could materialize within the next 12 months and assess an adverse scenario could result in a multi-notch downgrade.

Under an upside scenario, S&P says it could revise the outlook to stable if the withdrawing shareholders reverse course and the bank takes successful steps to reposition its policy function and overall policy relevance while asset quality deterioration is contained.

(Photo: Bigapplestock/ Dreamstime)

andrei@romania-insider.com