Fitch confirms "BBB" rating with negative outlook for Banca Românească

Fitch Ratings has affirmed ratings of Banca Românească S.A. at Long-term Issuer Default (IDR) "BBB" with Negative Outlook, Short-term IDR "F3", Individual "D" and Support "2".

The IDRs and Support Rating of Banca Românească reflect the high potential of support available from its parent, National Bank of Greece S.A. rated "A-"/ Negative Outlook by Fitch.

The Individual Rating reflects the bank"s small size, weak profitability, a small customer deposit franchise and credit risks stemming from a history of rapid expansion. It also reflects good risk management policies with NBG"s guidance, comfortable liquidity and limited market risk.

The continued growth of expenses and higher credit impairment costs led to low operating profitability in 2008, the report says.

Once the global crisis set in, the bank has stopped all new investments and has substantially tightened lending policies. However, the bank remains exposed to credit risk stemming from its foreign currency loans to unhedged borrowers.

Non-performing loans (overdue more than 90 days) reached 2.3% of total loans in Q1 2009.

Banca Românească remains heavily reliant on parent funding, Fitch says. Its liquidity however is comfortable, adhering to the National Bank of Romania"s (NBR) stringent liquidity requirements. Capitalization was substantially strengthened in 2008 through a series of cash injections. In Fitch"s opinion, Banca Românească has consolidated its capitalization, but given the volatile and deteriorating operating environment and also its weak internal capital generation, further injections may be needed.

Banca Românească is part of the National Bank of Greece group, accounting for 2.9% of the total assets of the group. It had 150 branches at the end of Q1 2009.