Morningstar DBRS monitoring Eurobank acquisition of Hellenic Bank

Rating agency Morningstar DBRS has indicated it will closely monitor developments surrounding Eurobank’s acquisition of Hellenic Bank, predicting a generally neutral impact on the bank’s credit fundamentals with manageable implications on its capital.

In a statement released this week, the agency assigned its inaugural credit rating to Eurobank, setting the long-term issuer rating at BBB (low).

Regarding the progress of Hellenic Bank’s acquisition, DBRS said that it will continue to monitor developments surrounding Eurobank’s public offer to acquire the remaining equity of Hellenic Bank. Eurobank has already acquired 55 per cent of Hellenic Bank.

“On a preliminary basis, Morningstar DBRS understands that in the short term, the impact of the acquisition will generally be neutral on most credit fundamentals of the group with a manageable negative impact on capitalisation,” the agency said.

However, it added that “if successful, the acquisition would further strengthen the group’s presence in one of its key external markets and also lead to more positive medium-term effects through synergies from the combination of the two entities”.

Nevertheless, DBRS concluded by saying that “the risks of executing the transaction must be carefully considered due to the size of Hellenic Bank, which represents approximately 25 per cent of the group’s total asset base”.