Fitch raises ratings of largest Greek and Cypriot banks

The international rating agency Fitch Ratings has raised the deposit ratings of five banks in Greece and Cyprus following an update of the criteria for assessing the banking sector in Europe.

The decision is linked to a change in the approach to evaluating bank resolution mechanisms and the strengthening role of depositor protection in EU countries. Against this background, the ratings of the Greek banks Eurobank, National Bank of Greece, and Piraeus Bank, as well as the Cypriot Eurobank Limited and Bank of Cyprus, have been improved.

For the Greek banks, the long-term deposit rating was raised from 'BBB' to 'BBB+', and the short-term rating from 'F3' to 'F2'. At the same time, the agency maintained the banks' Viability Rating at 'bbb-'.

Fitch noted that the updated methodology assumes a clearer distinction between deposit ratings and assessments of other bank debt obligations. The main focus is now on the effectiveness of European depositor protection mechanisms and the financial stability of credit institutions.

Despite the upgrade, the agency pointed out that the banks' liquidity and funding indicators do not yet allow for an even higher short-term rating.

For the Cypriot banking sector, Fitch's decision is seen as a positive signal for investors and depositors. The rating upgrade indicates a strengthening of the banks' financial stability after several years of restructuring and enhanced risk control.

Experts note that the rating improvement may also contribute to increased confidence in the region's banking system and reduce the cost of raising financing on international markets.