Ljubljana, 29 September (STA) - Abanka Vipa, Slovenia's third largest bank, said Wednesday it had been downgraded by credit rating agency Moody's, with the news coming just a day after the agency downgraded the country's top two banks, NLB and NKBM.
Abanka's financial strength rating was affirmed at D+ but its long-term deposit rating was downgraded by one notch to Baa1. The rating carries a negative outlook.
Moody's said that the rating change is driven by the continued weakness in the Slovenian credit environment, which is likely to lead to a deterioration in the bank's financial position.
Although Abanka's capitalisation is currently sound and despite its assets quality comparing favourably with its peers, the bank remains vulnerable to the weak credit environment in Slovenia, as evidenced by the continued flow of corporate insolvencies.
Yesterday NLB's long-term bank deposit rating was downgraded from A1 to A3 and its financial strength rating from C- to D+. NKBM has been downgraded from A2/D+ to Baa1/D. Both banks' outlooks are negative.
The rating downgrade has caused concern in Slovenia since it means that borrowing will be more expensive for the banks and, by extension, their customers.
Daily Delo quotes economists Dusan Mramor and Ivan Ribnikar, of the Ljubljana Faculty of Economics, as saying that this is very bad for the economy, but expected considering the foot-dragging over NLB's capital increase.
"The downgrade will have unpleasant consequences: credit will be more expensive," Ribnikar said.