The international credit rating agency Moody's Investors Service has upgraded the ratings of three Czech banks, namely Ceska Sporitelna, Komercni Banka and the Czech Export Bank as a result of the recently changed outlook for the Czech Republic's 'A1' foreign- and domestic-currency ratings from stable to positive. Ceska Sporitelna financial strength rating has been upgraded to 'C' from 'C-' with the rating action not affecting CS A2/P-1 deposit ratings, which were put on review for possible downgrade in January.

The upgrade of CS's FSR concludes the review for possible upgrade initiated in November 2005 and acknowledges the bank's good results over the past two years, the successful business expansion since 2003 and the enhancements in its risk management. Meanwhile, Moody's has changed the outlook on the ' A1 ' foreign currency deposit ratings of KB to positive from stable with 'P-1' rating being affirmed, while KB's FSR has been revised upwards to 'C' (Stable outlook) from 'C-' . The upgrade of KB's FSR also concludes a review for possible upgrade initiated in November and acknowledges the good progress the bank has made in recent years with the increasing sustainability of KB earnings.

At the same time, the outlook on the ' A1 ' issuer and debt ratings of the Czech Export Bank has been revised upwards to positive from stable. Being a 'Government Related Issues' (GRI), CEB rating reflects an assessment of the GRI's baseline credit risk, the default risk of the supporting government, the default dependence between the GRI and the government, as well as the expected level of support from the government. Moody's expects that the first three components will remain unchanged and therefore, were the 'A1' government bond rating and its 'A1' foreign currency bank deposit ceiling of Czech Republic to be upgraded, it is very likely that an upgrade of the 'A1' CEB issuer rating would follow.