On 25 March 2013 Moody's Investors Service downgraded Nova KBM’s long-term deposit rating to Caa2 from B3, with a negative outlook. The junior subordinate ratings were downgraded to C(hyb) from Caa3(hyb). Nova KBM’s standalone E bank financial strength rating (BFSR) has been affirmed. In addition, Moody’s lowered the bank’s baseline credit assessment (BCA) to caa3 from caa1 within E standalone BSFR.
The downgrades were prompted by Moody's assessment that NKBM’s credit profile has been further weakened by (i) the necessity of a further capital injection to maintain capital adequacy above the European Banking Authority’s (EBA) regulatory guidelines; ii) sizeable provisioning needs undermining its already weak capital base; and iii) the expectation of further deterioration in asset quality given the weak economic trends and difficulties in Slovenia’s highly-leveraged corporate sector.
