Fitch upgrades Greek bank IDRs after deposit withdrawal restrictions are lifted

Fitch Ratings upgraded Alpha Bank AE’s and National Bank of Greece S.A.’s Long-Term Issuer Default Ratings (IDR) to ‘CCC+’ from ‘RD’ and Eurobank Ergasias S.A.’s and Piraeus Bank S.A.’s Long-Term IDR to ‘CCC’ from ‘RD’, it said on Monday. At the same time, Fitch has upgraded the four banks’ Short-Term IDRs to ‘C’ from ‘RD’. All other issuer and issue ratings are unaffected by the event.

“The upgrades of the Long-Term IDRs to the level of the VRs follow the lifting of bank deposit withdrawal limits and legal restrictions on the free movement of capital within the country on 1 October 2018. In Fitch’s view, although some restrictions remain on cross-border outward capital flows, Greek banks are now substantively able to service all their obligations,” it said.

In 2017, the Greek Finance Ministry in cooperation with the Bank of Greece published a roadmap for the gradual relaxation of capital controls, which envisaged three steps. The recent removal of capital controls within Greece completes the second step of the roadmap. “In Fitch’s view, the third step, which entails the removal of the remaining capital controls on capital flows outside Greece, is likely to be implemented in the short term,” the rating agency said.