Bank of Valletta plc - S&P Downgrades BOV’s Long-Term Rating

On 1 August 2018, S&P Global Ratings (“S&P”) downgraded its long-term Issuer Default Rating on Bank of Valletta plc to “BBB” from “BBB+” but maintained its outlook as “Negative”.

S&P explained that it lowered its rating on BOV due to increased reputational and operational risks for the Maltese banking sector generally. Specifically for BOV, however, the credit rating agency added that it sees risks for the bank’s business, capital and risk profiles from potential reputational damage and litigation charges relating to the Deiulemar Trust whereby BOV is being sued for the amount of €363 million. On the other hand, S&P also noted that it anticipates BOV’s resilient profitability and contained credit losses that, by 2020, should enable it to maintain its risk-adjusted capital ratio before adjustments at close to its 2017 levels.

With respect to the “Negative” outlook on BOV, S&P explained that this reflects the possibility of further deterioration in the bank’s credit rating over the next 12 to 24 months, mostly due to increased risks related to legal litigations.