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International credit rating agency Moody’s Investors Service announced this week it has issued its ratings for Bank of Valletta following a comprehensive review carried out earlier this year.
The long-term foreign currency deposit rating has been changed from A3 to Baa1 with a stable outlook whilst the outlook for the Bank’s D+ financial strength rating has been changed from negative to stable. The short-term Prime 2 rating remains unchanged.
In its report, Moody’s have explained that the change in the Long Term Bank Deposit Rating is the result of stricter EU regulations regarding state support which now apply to Malta as an EU member country. In other words, the ability of the Maltese authorities to provide support to banks in case of need could be constrained by EU regulations regarding state support and competition. Moody’s have stated that similar rating actions have been taken for other banks domiciled in other countries that joined the EU in May 2004.
Moody’s have also changed the outlook on BOV’s Financial Strength Rating from negative to stable “to reflect the Bank’s improving financial fundamentals, which are underpinned by higher earning power and better asset quality”. Moody’s further commented that “the concerted management efforts to tackle the credit quality problems by strengthening the credit risk management capabilities and enhancing internal controls led to an improvement in asset quality in 2004”.
BOC CEO Tonio Depasquale commented that the change in the Long Term deposit rating of the Bank is based entirely on considerations which are extraneous to the Bank’s performance, namely regulations concerning the government’s support capabilities, “Moody’s have also acknowledged the re-structuring that has been carried out by BOV in the past few years and the Bank’s ability to enhance its earnings capacity and profitability.” commented Mr Depasquale.
The Bank’s CEO also expressed his satisfaction at the change in the outlook on the Bank’s Financial Strength Rating, from negative to stable, adding that the Bank’s on-going efforts to continually strengthen its fundamentals have been duly acknowledged by the rating agency.
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