Fitch put Kommunalkredit Austria’s A rating on Rating Watch Negative (RWN) on Friday because a planned sale of the bank by the Republic of Austria could lead to a negative rating action on its support driven ratings.

Kommunalkredit Austria is 99.8% owned by the sovereign, which is rated AAA. Its Viability Rating of b+ was not affected by the rating actions, but its Support Rating of 1 and Support Rating Floor of A were put on RWN.

“The RWN reflects Fitch’s opinion that the sale process of KA, initiated in mid-2012 and to be finalised in mid-2013, could lead to a negative rating action on KA’s support driven ratings if the new owner’s ability or propensity to support KA is weaker than under the current ownership structure,” said the rating agency.

“If the privatisation of KA goes ahead as currently planned, the extent of a downgrade of KA’s support driven ratings, if any, will depend on, among other things, the creditworthiness and rating and the support propensity of the acquiring entity. Fitch understands that an adequate credit quality and suitability of a buyer is an integral criterion in the privatisation process, managed by Austria’s FIMBAG, which should limit the extent of any downgrade.”

Fitch said that it expects to resolve the RWN by end-June 2013, a privatisation deadline set by the European Commission. It said that it expects the Austrian government to ask for an extension if no suitable buyer is found by then.