OREANDA-NEWS. Fitch Ratings has revised ProCredit Bank ad Beograd's (PCBS) Outlook to Positive from Stable. At the same time, Fitch has affirmed its Long-term foreign and local currency Issuer Default Ratings at 'B+' and 'BB-', respectively.

The Support Rating is affirmed at '4'. The 'b+' Viability Rating of PCBS was not affected by this rating action. A full list of ratings is available at the end of this rating action commentary.

The rating action follows Fitch's revision of the Outlook on Serbian sovereign rating (see 'Fitch Revises Serbia's Outlook to Positive; Affirms at 'B+'' dated 18 December 2015 on www.fitchratings.com).

KEY RATING DRIVERS
PCBS's IDRs and Support Rating are driven by potential support from its parent, ProCredit Holding AG & Co. KGaA (PCH, BBB/Stable). However, the Long-term foreign currency IDR is constrained by Serbia's Country Ceiling of 'B+' reflecting potential transfer and convertibility risks. The one-notch uplift of PCBS's local currency IDR above both the Country Ceiling and the bank's foreign currency IDR reflects a lower probability of restrictions being placed on servicing of local currency obligations in case of systemic stress.

The Positive Outlook on PCBS's Long-term IDRs reflects that on Serbia's Long-term foreign and local currency IDRs, and therefore the potential for the bank's ratings to be upgraded if the country's ratings are upgraded and the Country Ceiling is revised upward.

PCBS's IDRs and Support Rating are driven by potential support from PCH. The support considerations take into account the 100% ownership, common branding, close parental integration and a track record of timely capital and liquidity support to group banks from PCH. Absent of Country Ceiling constraints, these considerations would typically be reflected in a one-notch differential between the rating of the parent, PCH, and that of PCBS.

PCH's ratings are based on Fitch's view of the support it could expect to receive from its core international financial institution (IFI) shareholders when needed. Fitch's view of support is based on PCH's ownership, effective corporate governance and the important and successful development role it fulfils in advancing responsible financing and small business lending in developing markets. This mission is in keeping with the developmental mandates of the core shareholders.

RATING SENSITIVITIES
Movements in Serbia's sovereign rating, accompanied by a change in the Country Ceiling, are likely to affect PCBS's IDRs. An upgrade of Serbian sovereign rating is likely to result in an upgrade of the Support Rating for PCBS.

The rating actions are as follows:

Long-term foreign currency IDR: affirmed at 'B+'; Outlook revised to Positive from Stable
Short-term foreign currency IDR: affirmed at 'B'
Long-term local currency IDR: affirmed at 'BB-' Outlook revised to Positive from Stable
Short-term local currency IDR: affirmed at 'B'
Viability Rating: unaffected at 'b+'
Support Rating: affirmed at '4'