Moody's lowered by between two to four notches the baseline credit assessments on the banks because of the "increasingly weak economic and operating environment in Hungary and the subsequent negative implications this has on all four banks' franchises, asset quality and profitability". The lower baseline credit assessments prompted the downgrades of between one and three notches of the banks' long-term local-currency and foreign-currency deposit ratings, it added.
Moody's lowered MKB Bank's baseline credit assessment by four notches to ca from b3. The assessment reflects Moody's view that the bank will "very likely" require further capital injections from its parent, BayernLB, in the next 12-18 months. Moody's also downgraded MKB Bank's local and foreign-currency deposit ratings to Caa2 from B2.
Speaking at some kind of “Investor of the Year” award gala last night in Budapest, Economy Minister Mihály Varga went out of his way to stress that, unlike Cyprus, Hungary had never even considered taxing bank deposits as a way to raise revenue.
Slovenian Infrastructure Minister Igor Maher resigned on Monday only five days after taking office in the new cabinet, adding to the problems of a new government striving to avoid a banking collapse to mirror that in Cyprus.
The small eastern European country has been fighting for months to avoid becoming the latest euro zone member to seek a formal international bailout. Bad loans issued by its banks total 7 billion euros ($9.10 billion) or a fifth of national economic output and the cost of ensuring its government debt has risen by a quarter in the past week.
LJUBLJANA, March 18 (Reuters) - Deposits in Slovenian banks are safe, the euro zone country's central bank said on Monday, rejecting any comparisons between their bad debt burden and the problems of Cyprus.
Now that Slovenia's central bank has told us that bank deposits are safe, I feel much better!
When one considers just how large the bad loan portion is of the total economy, it makes one wonder if the central bank is speaking with a forked tongue.
As the chart below (courtesy of Trading Economics) shows, the country has not recovered much since the 2008 financial crisis.
This series of small economies (Greece then Cyprus) that are teetering on default due to an over-leveraged banking system certainly causes one to pause and reflect where this Euro ship is heading.
The Hungarian situation does not look that much stronger than Slovenia's.
It begs the question - when will capital controls be forced upon Slovenia in an attempt to prevent a run on deposits?