Moody’s placed on review for downgrade the Baa3 rating of BRE Bank Hipoteczny today (Thursday), with its direct and indirect parents having been put on negative review by the rating agency.

The covered bond issuer’s supported rating of Baa3 incorporates four notches from its direct parent, BRE Bank, and its indirect parent, Commerzbank, said Moody’s. BRE Bank was cut from Baa1 to Baa2 today and put on review for further downgrade.

A one notch downgrade of Commerzbank’s standalone rating did not influence the rating of BRE Hipoteczny, according to Moody’s, but its rating is sensitive to further downgrades of the parents’ ratings and will be reviewed in light of the bank’s integration and dependence on its parents and funding providers.

“The likelihood of parental support remains very high in case of need, unchanged from the previous assumptions,” noted the rating agency. “However, Moody’s considers that the German parent’s ability to extend ongoing support has weakened as expressed in downgrading Commerzbank’s standalone rating to D+ (mapping to Baa3) and placing it on further review for downgrade.”

The rating agency assigns three notches of uplift to BRE Bank’s supported ratings due to a combination of parental and systemic support assumptions. Moody’s notes that BRE Bank is the third largest bank in Poland with sustained market shares and a large customer deposit base.

Moody’s said the high degree of systemic support incorporated into BRE Bank’s supported ratings is expected to remain stable given the current stable outlook on the sovereign rating and BRE’s position as the third largest franchise in the country.

Mortgage covered bonds issued by the Polish bank have a Timely Payment Indicator (TPI) of “very improbable” resulting in a TPI leeway of zero.