Fitch Ratings are currently reviewing the issue of sovereign support for banks globally. As part of this exercise, the agency has announced that BOV’s support rating has been reviewed downwards from ‘2’ to ‘5’.

The support rating evaluates the likelihood that a bank will receive extraordinary support in case of need. Such support typically comes from the national authorities of the country where the bank is domiciled.

Fitch’s action does not reflect any concern about the ability or willingness of governments to support financial institutions, but rather reflects the agency’s opinion that recent regulatory initiatives have reduced the likelihood of sovereign support for commercial banks worldwide. Within the European Union (EU), the Bank Recovery and Resolution Directive (BRRD) and the Single Resolution Mechanism (SRM) provide a framework for resolving banks that is likely to require senior creditors participating in losses, if necessary, instead of or ahead of a bank receiving sovereign support.

This action does not in any way affect BOV’s long-term credit rating of BBB+ with a stable outlook.

BRRD and SRM form part of the EU project of the Banking Union, which will require banks to improve their loss-absorbing capability by increasing capital.

In this context, BOV will continue to strengthen its capital buffers by embarking upon a programme of capital issuance in the medium term.