Fitch Ratings has downgraded Polish Kredyt Bank's (KB) Long-term Issuer Default Rating (IDR) to 'BBB' from 'A-' and Czech Ceskoslovenska Obchodni Banka a.s.'s (CSOB) Long-term IDR to 'BBB+' from 'A-'. Fitch has also maintained KB's Long-term IDR on Rating Watch Evolving (RWE) and removed CSOB's Long-term IDR from Rating Watch Negative (RWN). A full list of rating actions is at the end of this release.

The rating actions follow the downgrade of the two banks' ultimate parent, KBC Bank (KBC), to 'A-'/Stable from 'A'/Rating Watch Negative (see 'Fitch Downgrades Dexia Bank Belgium and KBC' dated 31 January 2012 at www.fitchratings.com).

The downgrade of CSOB's Long-term IDR and Support Rating reflects the reduced probability that KBC will be able to provide support to its Czech subsidiary. CSOB's ratings are now underpinned by both its intrinsic strength, as reflected in its 'bbb+' Viability Rating, and potential support from KBC.

The downgrade of KB's Long-term IDR also reflects the reduced probability that KBC will be able to support the bank. In addition, Fitch has reassessed the appropriate notching between the ratings of KBC and KB, and widened this differential to two notches from one. This reflects the non-strategic nature of KB in light of KBC's intention to sell its stake in the bank. At the same time, KB's ratings continue to reflect what Fitch views as a strong commitment on the part of KBC to support KB as long as it remains the bank's major shareholder.

The RWE on KB's IDRs and Support Rating reflects the potential for these ratings to be upgraded or downgraded if KB is bought by an entity with a greater or lesser ability to provide support than KBC.

Fitch Polska SA

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