The ratings on Hungary-based Magyar Takarékszövetkezeti Bank zRt. (Takarékbank; Bank of Hungarian Savings Cooperatives Co. Ltd.) are constrained by mounting macroeconomic and industry risks in the Republic of Hungary, increasing the likelihood of severe repercussions on Takarékbank's financial profile. Particularly, we are concerned that asset quality and earnings could deteriorate considerably between 2009-2011, and because Takarékbank capitalization is low. Its majority ownership by and close integration with the savings cooperatives (SC) sector support the ratings on Takarékbank. This provides it with a one-notch uplift from its stand-alone credit profile, reflecting our view of strategic importance for and ownership support--if necessary--from the aggregate SCs. Moreover, the ratings reflect Takarékbank's robust funding and liquidity position from its central bank function for the
