International rating agency Fitch Ratings has affirmed at BBB-, with a stable outlook, long-term IDR ratings assigned to eight Russian banks that are owned by foreign concerns, namely HSBC Bank, Credit Agricole CIB, ING Bank, Nordea Bank, Danske Bank, SEB Bank, Bank of China (Russia) and China Construction Bank. The full list of rating actions was given in the agency's press release.
IDR, support and senior debt ratings at the above banks (in cases when they are assigned) reflect Fitch's opinion that there is a strong likelihood of the banks gaining support from their financially strong parent companies, if need be, the press release said. This viewpoint is determined by the fact that the banks are 100% owned by foreign parent companies, and also by high management and operating integration between parent and subsidiary banks, the presence of general brands (which implies reputation risks if a subsidiary bank goes bankrupt) and the very low cost of potential support given the limited size of subsidiary banks (less than 1% of the groups' assets).
Foreign currency IDRs assigned to the banks under review are limited by the country ceiling of the Russian Federation (BBB), while their local currency IDRs (if assigned) also take into account Russia's country risks. The country ceiling reflects the likelihood that the state will impose restrictions on the transfer and conversion of funds, and also the risk that the subsidiary banks can be not able to use support of their parent companies to serve their foreign currency obligations, Fitch specified.
Excluding the country ceiling and other country risks, Fitch will likely rate the subsidiary banks a notch lower than their parent companies.
Fitch did not assign any sustainability ratings to the subsidiary banks owing to their strong management and operating integration with the parent companies, active participation of the parent companies in loan approval procedures at subsidiary banks, guarantees from parent companies that are provided, to a large extent, with regard to credit risks faced by subsidiaries, substantial amounts of funds from parent companies to subsidiaries and/or other operations that are carried out with the parent companies (e.g. currency hedging), dependence of subsidiaries on a group in terms of business attraction, and also the considerable possibility to redistribute funds between balance sheets maintained by parent companies and subsidiaries.
Affirmation of the banks' national scale ratings at AAA(rus) takes into account Fitch's opinion that these banks are still among banks with the strongest creditworthiness in Russia. The stable outlook for national scale ratings reflects the forecast for the banks' long-term IDRs.
