Download moody`s affirms ratings of national bank of greece and

MOODY'S AFFIRMS RATINGS OF NATIONAL BANK OF GREECE AND FINANSBANK
(TURKEY); PLACES FINANSBANK'S Baa3/P-3 LOCAL CURRENCY DEPOSIT RATINGS
ON REVIEW FOR POSSIBLE UPGRADE
Action follows National Bank of Greece's planned acquisition of a
controlling stake in Finansbank A.S. (Turkey)
Limassol, April 05, 2006 -- Moody's Investors Service has affirmed the
A2/Prime-1 foreign currency deposit, A2 senior debt, A3 subordinated
debt, Baa1 preferred securities rating and C financial strength rating
(FSR) of National Bank of Greece S.A. (NBG). At the same time, Moody's
has affirmed the B1/Not-Prime foreign currency deposit ratings and D+
FSR of Turkey's Finansbank A.S., while its Baa3/Prime-3 local currency
deposit ratings were placed on review for possible upgrade. Moody's
also affirmed the Ba3 long-term foreign currency senior unsecured
issuer rating assigned to Finans Finansal Kiralama A.S. (Finans
Leasing), which is the majority controlled leasing subsidiary of
Finansbank. This rating action results from NBG's plan to acquire a
controlling stake in Finansbank.
NBG plans to buy a 46% stake in Finansbank from the bank's founder and
controlling shareholder Husnu Ozyegin -- who will keep a 9.7% stake,
and NBG will proceed with a public offer for the remaining 44.3% stake
in order to achieve a controlling shareholding. The acquisition, which
is subject to regulatory approvals, is expected to be completed during
the third quarter of 2006. NBG plans to buy the domestic activities of
Finansbank, including its leasing, asset management and brokerage
subsidiaries, as well as the bank's subsidiary in Malta. As part of the
transaction at closing Finanbank's other international operations -- in
Russia, Romania, Switzerland and the Netherlands -- will be sold back
to FIBA Holdings, which is owned by Finansbank's founder.
Moody's commented that NBG's entry into the Turkish market through
Finansbank is in line with its strategy to become a leading banking
group in Southeast Europe. Turkey is the largest economy in this
region, with a population of 70 million and a low banking penetration,
suggesting that the Turkish banking sector is expected to experience
significant growth in the future, especially as the county converges to
become a European Union member. Finansbank is the fifth-largest private
bank in Turkey, and the eighth-largest overall. Operating through a
network of 221 branches in Turkey and one in Bahrain, Finansbank
commands market shares in Turkey of 5.5% and 2.5% in loans and
deposits, respectively, with a particular strength in credit cards.
The tie up of NBG and Finansbank will result in the largest banking
group in the region, present in six countries with a combined
population of 125 million, with a customer base of 10.6 million
serviced through a branch network of 1,060 units, and a total balance
sheet of about EUR69 billion. Moody's added that the transaction is the
largest overseas investment by a Greek bank, and the most significant
financial deal involving Greek and Turkish interests, signifying the
important political rapprochement between the two countries.
In affirming NBG's ratings, Moody's noted that these ratings are
underpinned by its dominant position in Greece -- with leading
positions in most key financial segments. The ratings are also
supported by the bank's improving key financial metrics, reflecting an
increasing recurring profitability, enhanced credit quality, solid
funding base and adequate capital levels. The acquisition of a
relatively large institution, such as Finansbank, active in a less
mature and more volatile operating environment, such as Turkey, is
expected to increase NBG's overall risk profile and to result in
potentially higher earnings volatility. However, Moody's believes that
this change is not material enough to warrant a ratings downgrade. In
addition, Moody's said the affirmation of NBG's C FSR is also based on
the expectation that NBG will raise its equity by up to EUR3 billion
through a rights issue, guaranteed in an underwritten commitment by a
group of international banks, and that the bank is committed to
maintaining its core Tier 1 ratio over 7.5%.
Moody's, however, cautioned that NBG's FSR could be negatively impacted
by a number of issues going forward, including, for example, (a)
unforeseen problems and challenges related to the acquisition and
integration processes; (b) any significant worsening in the Turkish
operating environment that could impact the financial performance of
Finansbank; (c) any major setback in the political relationship between
the two countries that could affect the franchise of Finansbank; (d)
any significant deterioration in NBG's financial performance, and (e)
any additional major acquisitions that could result in a higher risk
profile and could stretch its financial resources.
Moody's decision to affirm Finansbank's D+ FSR takes into account
Finansbank's good -- and improving -- franchise within its domestic
market, as well as its strong financial indicators, underscored by its
healthy profitability, strong capital base and excellent asset quality.
At the same time, Moody's notes that its concerns about the loss of the
bank's international operations, which provide diversification and
funding benefits to the Turkish bank, will be mitigated by the
inclusion of Finansbank in the NBG Group which will allow it access to
less expensive funding alternatives through NBG's strong credit
ratings.
Finansbank's foreign currency deposit ratings, affirmed at B1/NotPrime, are constrained by the country ceiling for such deposits in
Turkey and will continue to increase in line with any increase in the
country ceiling. In placing the Baa3/Prime-3 local currency deposit
ratings on review for possible upgrade, Moody's expects that the NBG
Group has the ability and willingness to provide external support in
the event of need to Finansbank, at a level higher than was previously
the case. Given that NBG's deposit ratings are currently at the A2
level, there is considerable scope for Finansbank's Baa3/Prime-3
ratings to converge toward the A3/Prime-2 country ceiling for local
currency deposits in Turkey.
In affirming Finans Leasing's Ba3 senior unsecured issuer rating,
Moody's notes that the rating is constrained by the country ceiling for
such ratings in Turkey, and will continue to rise in line with any
increase in the country ceiling. The transaction is not expected to
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change the shareholding structure of Finans Leasing -- with Finansbank
A.S. retaining a majority share.
The following ratings were affected by this rating action:
National Bank of Greece S.A. -- A2/Prime-1 foreign currency deposit and
C financial strength ratings were affirmed;
NBG Finance plc -- A2 senior debt and A3 subordinated debt ratings were
affirmed;
National Bank of Greece Funding Ltd -- Baa1 preferred securities rating
was affirmed;
National Bank of Greece (Jersey) Limited -- Baa1 preferred securities
rating was affirmed;
Finansbank A.S. -- B1/Not-Prime foreign currency deposits and D+
financial strength ratings were affirmed; Baa3/Prime-3 local currency
deposits ratings were placed on review for possible upgrade;
Finans Finansal Kiralama A. S. -- Ba3 long-term foreign currency senior
unsecured issuer rating was affirmed;
Headquartered in Athens, National Bank of Greece had total assets of
EUR60.4 billion at year-end 2005. Headquartered in Istanbul, Turkey,
Finansbank A.S. had assets of EUR8.2 billion (excluding the
international operations) as at December 2005. Also headquartered in
Istanbul, Turkey, Finans Leasing had total assets of EUR225 million.
(END) Dow Jones Newswires
April 05, 2006 13:20 ET (17:20 GMT)
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