S&P ups outlook on Croatian Zagrebacka Banka’s BB+ rating to positive

S&P revised on Tuesday to positive from stable the outlook on the BB+ long-term issuer credit rating on Croatia-based Zagrebacka Banka while at the same time confirming the rating unchanged. It said the move reflected the improvement of the outlook on Croatia’s BB+ ratings to positive from stable last Friday with the move reflecting the expectations that the economy will continue to grow and the fiscal and debt metrics will improve further. The agency explained that it capped its rating on Zagrebacka Banka at the sovereign rating as the bank is predominantly exposed to Croatia’s economic risks. S&P said that the positive outlook on the bank reflected that on Croatia’s sovereign rating and therefore, if the ratings on Croatia were raised, more parental support on Zagrebacka Banka that is owned by UniCredit Bank (BBB/Stable/A-2) could be also incorporated in the bank’s ratings. The agency also said that the outlook could be reversed back to stable in case that, despite the macroeconomic improvements in Croatia, the bank’s strategic importance within the UniCredit group had markedly decreased or the parent bank’s creditworthiness had weakened, resulting in deteriorated potential support from the parent.

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