...Parent Support: The Issuer Default Ratings (IDRs) and Support Ratings of Banca Comerciala Romana S.A. (BCR) reflect the high likelihood of support from its 93.6% owner Erste Group Bank AG (BBB+/Stable/bbb+). Fitch Ratings views the Romanian subsidiary as strategically important for Erste, despite the recent volatility in performance. Viability Rating Upgrade: The upgrade of BCR's Viability Rating (VR) reflects its improving asset quality from the strong execution of the non-performing loan (NPL) resolution strategy that was introduced in 2014 and the increase in coverage of impaired loans with IFRS reserves. It also reflects improved loss-absorption capacity through a stronger capital position. Asset Quality Weak but Improving: BCR is on track to reach an EBA non-performing exposure ratio in the high single digits by year-end (from 10.3% at end-1H16; bank standalone), given good execution of its NPL resolution strategy and an operating environment favourable for recoveries and portfolio...
