Risks arising from the exposure of Raiffeisen Bank International (RBI) and UniCredit Bank Austria to Russia have led to Moody’s putting five Austrian covered bonds on review for downgrade, while it downgraded Czech Raiffeisenbank a.s covered bonds from A2 to A3.

On 23 December, Moody’s took rating actions on eight banks that are part of the Austrian Raiffeisen Banking Group, citing its assessment of materially increased risks to the earnings and capital of RBI and the entire group due to the large Russian banking activities of RBI. RBI’s standalone Bank Financial Strength Rating was cut from D+ to D, and placed on review for further downgrade, with its long term issuer rating lowered from A3 to Baa1, and put on review for further downgrade.

Raiffeisen-Landesbank Steiermark’s A3 rating was put on review for downgrade and Raiffeisenlandesbank Niederoesterreich-Wien was downgraded from A3 to Baa1, with its rating left on review for downgrade. Moody’s followed this up on 29 December by putting on review for downgrade the Aaa ratings of mortgage and public sector covered bonds issued by Raiffeisen-Landesbank Steiermark, and of mortgage covered bonds issued by Raiffeisenlandesbank Niederoesterreich-Wien.

Czech subsidiary Raiffeisenbank a.s had its covered bond rating cut, from A2 to A3, on review for downgrade, on 30 December, with Moody’s citing a deterioration in its assessment of the issuer’s credit strength.

Moody’s on 29 December also put on review for downgrade the Aa1 rating of UniCredit Bank Austria mortgage covered bonds and the Aaa rating of the issuer’s public sector covered bonds. The rating agency had on 23 December put the issuer’s Baa2 rating on review for downgrade, citing “materially increased risks” to earnings and capitalisation for the Austrian bank’s Russian subsidiary, ZAO UniCredit Bank AG, which it said is an important contributor to UniCredit Bank Austria’s profits.