Czech Komercni Banka to repay early EUR 233mn loan to parent Societe Generale.

By bne IntelliNews December 13, 2011
The management board of Czech lender Komercni Banka has decided to use an option to early repay a CZK 6bn (EUR 233mn) loan to its parent bank Frances Societe Generale, patria.cz reported. The early repayment of the loan is subject to the approval of the Czech central bank. The 10-year subordinated credit was extended by Societe Generale in 2006 with an option for an early repayment after five years. Komercni Banka, the Czech Repulics third largest lender by assets, wants to repay the loan at the earliest possible date which is February 27, 2012. The bank said that its capital adequacy ratio, which stood at 16% as of end-September, will stay sufficiently high as the subordinated loan contribution is only 1.7%. On December 9, Moodys cut Societe Generales standalone bank financial strength rating (BFSR) by two notches to C- from C+ and the long-term debt and deposit ratings by one notch to A1. Earlier the rating agency lowered the outlook on Czech banking system to negative from positive on expectations that a slowdown in Europe will create pressure on assets quality and impair the banks profitability and capitalisation. A risk to the largely foreign-owned Czech banking system is expectation that local banks may face pressure to upstream capital to their western European parents, Moodys said.

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