OREANDA-NEWS. Fitch Ratings has revised Croatia-based Zagrebacka Banka d.d.'s (ZABA) Outlook to Negative from Stable, while affirming its Issuer Default Ratings (IDRs) and Support Rating. Its Viability Rating is not affected by today's rating action. A full list of rating actions is available at the end of this rating action commentary.

The Outlook revision follows a similar action on Croatian's sovereign rating on 31 July 2015 (for more details see 'Fitch Revises Croatia's Outlook to Negative; Affirms FC IDR at 'BB'' at www.fitchratings.com).

KEY RATING DRIVERS

IDRS, SUPPORT RATING
ZABA's Long- and Short-term IDRs and Support Rating are based on the potential support available from its ultimate parent, UniCredit S.p.A. (UC; BBB+/Stable/bbb+). Fitch believes that UC continues to have a strong propensity to support ZABA given the importance of the central and eastern Europe (CEE) region to its strategy. The agency would normally rate ZABA one notch below UC's IDR, if not for the cap from the Country Ceiling of Croatia (BBB-).

RATING SENSITIVITIES

IDRS, SUPPORT RATING
ZABA's IDRs could be downgraded if (i) Croatia's Country Ceiling is revised lower; or (ii) UC markedly changes its CEE strategy, resulting in a lower expectation of parent support for its subsidiaries in the region in general, and ZABA in particular.

An upgrade of ZABA's Long-term IDR is contingent on an upward revision of the Country Ceiling, which is unlikely at present given the Negative Outlook on the sovereign rating.

The rating actions are as follows:

Long-term IDR affirmed at 'BBB-'; Outlook revised to Negative from Stable
Short-term IDR affirmed at 'F3'
Support Rating affirmed at '2'
Viability Rating of 'bb'; unaffected