Fitch Ratings has upgraded Hellenic Bank's (HB) Shareholder Support Rating (SSR) to 'bb' from 'bb-'. The upgrade follows the upgrade of Eurobank S.A.'s Long-Term Issuer Default Rating (IDR) to 'BB+' from 'BB', on September 4th, since Eurobank is HB's majority shareholder with a 56% stake and is the most likely support provider.

Fitch noted that HB's Long-term IDR of 'BBB-', which remains driven by the bank's Viability Rating of 'bbb-', and other ratings, are unaffected.

HB's SSR of 'bb' is one notch below Eurobank's Long-Term IDR because the agency believes that Eurobank's propensity to provide support to HB will remain constrained until it increases its stake above 75% or manages to achieve material integration and synergies despite the presence of large minority shareholders. The notching also reflects HB's size relative to Eurobank, which would make any required support manageable but not immaterial, Fitch said.

It noted that Eurobank gradually increased its stake in HB over the past two years, reaching a majority stake in June 2024 and starting to fully consolidate it from 1 July 2024. The consolidation will increase the group's total assets by about 22% to just below EUR100 billion. Eurobank's involvement in HB's management has been limited so far. However, Eurobank plans to shortly replace part of HB's board of directors and appoint its new chief executive officer, thus taking a more active role.

"We expect Eurobank to achieve some integration and synergies, although we believe that the extent of them will depend on Eurobank's ability to further increase its stake and potentially merge HB with its existing Cypriot subsidiary", Fitch said in a press release.

HB's SSR could be downgraded if Eurobank's Long-Term IDR was downgraded. It could also be downgraded if Eurobank is unable to increase its stake in the bank and minority shareholders significantly constrain parent-subsidiary integration, making it difficult for Eurobank to achieve material synergies and leading to a reconsideration of HB's role in the group.

Fitch also noted that an upgrade of the SSR would be contingent on an upgrade of the Eurobank's Long-Term IDR, or an improvement in Fitch's assessment of Eurobank's propensity to support HB. This would likely require an increase in Eurobank's HB stake above 75%, deeper integration or a longer record of HB successfully supporting the group's objective, including through synergies realisation.