LRGs And Banks In Germany, Austria, And CEE Have Some Protection Against The Financial Impact Of Floods

Following torrential rain in parts of Germany, Austria, the Czech Republic, and Poland, some areas have seen rivers overflow and widespread flooding. That said, river flooding is a known risk in the region and S&P Global Ratings expects the fiscal architecture established to handle previous catastrophes to cushion the financial impact for the local and regional governments (LRGs) affected. Furthermore, we anticipate that the floods will have only a limited impact on profitability at local banks. We do not expect our ratings on regional LRGs or banks to be affected. The Federal State of Lower Austria (AA/Stable/A-1+) has been severely hit by torrential rain, overflowing rivers, and even some landslides. That said, damage from the current flooding has mostly been

...- The budgetary impact of the current floods on the most heavily hit region, the State of Lower Austria, should remain manageable, thanks to limited compensation ratios for citizens' losses and material reimbursement from the central government. - Because Germany has so far been spared major physical damage, we do not expect it to use a similar risk-sharing mechanism to that used after previous floods to distribute costs between the federal government and the 16 German states, over several years. - The cities of Krakow, Lodz, and Brno, which we rate, have reported that they have not been seriously affected by the recent rainfall and subsequent river flooding. - We expect the profitability of banks in the flood-affected regions to remain robust, despite the flood events. Following torrential rain in parts of Germany, Austria, the Czech Republic, and Poland, some areas have seen rivers overflow and widespread flooding. That said, river flooding is a known risk in the region and S&P Global...

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