Similarly the outlook on HBOR's (P)Baa3 backed senior unsecured MTN program rating was also changed to negative from stable. The outlook change was triggered by the recent change to negative from stable of the outlook on the Baa3 local-currency sovereign bond rating.

The standalone financial strength of the institution, as measured by its baseline credit assessment (BCA) of 12 (on a scale of 1-21), equivalent to Ba2 on Moody's long-term rating scale, remains unaffected and was not a driver of today's outlook change, the agency said.

In view of the 100% government ownership of HBOR, Moody's continues to believe that the Croatian government remains committed to supporting this entity in case of need.

As HBOR's obligations benefit from an explicit, irrevocable state guarantee, its issuer and senior unsecured debt ratings would move up or down in tandem with any upgrade or downgrade of Croatia's local-currency bond rating, the statement said.