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Are Foreign Parent Banks Turning Their Backs on Their Eastern European Subsidiaries? Apr 02
Standard & Poors, April 2002
Abstract
The recent events surrounding Croatia-based Rijecka Banka (not rated) demonstrate that majority-owned banks do not always receive support from their foreign bank parents. Rijecka Banka, the third-largest Croatian bank with $1.3 billion in assets, recently revealed that it had suffered large losses in foreign exchange trading that went undetected for four years. Losses by Rijecka Banka's chief currency dealer could amount to as much as $98 million, wiping out three-quarters of the bank's capital. Rijecka Banka's 60% owner, Bavarian state bank Bayerische Landesbank Girozentrale (BLG; AAA/Negative/A-1+), decided to abandon its investment rather than provide liquidity and recapitalize it. BLG sold its shares to the Croatian state for the symbolic price of $1, resulting in the loss of its $75 million...
Companies mentioned in this report are: Bayerische Landesbank,Nomura Securities Co. Ltd.,Croatia (Republic of),KBC Bank N.V.
Standard and Poors RatingsXpress Credit Research provides in-depth coverage of international corporates, financial institutions, insurance companies, utilities, sovereigns and structured finance programs. RatingsXpress Credit Research lets users determine the credit rating of holdings and identify key factors underlying an issuer's creditworthiness, distinguishes the different risk exposures for new and existing deals, and provides an understanding of how their analysts interpret key regulatory, political and environmental events and their economic impact.
Research Type: Commentary
Criteria articles describe the thought process and methodology Standard & Poor's analysts use in determining ratings. These commentary pieces discuss both the quantitative (economic and financial) and qualitative (business analysis and caliber of management) aspects of the analysis, as well as legal issues.
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