November 7, 2016 / 10:13 AM / 9 months ago

Fitch Rates Austria's BAWAG P.S.K. 'A-'; Outlook Stable

(The following statement was released by the rating agency) LONDON, November 07 (Fitch) Fitch Ratings has assigned Austrian bank BAWAG P.S.K. Bank fuer Arbeit und Wirtschaft und Oesterreichische Postsparkasse Aktiengesellschaft a Long-Term Issuer Default Rating (IDR) of 'A-' with a Stable Outlook, a Short-Term IDR of 'F1' and a Viability Rating (VR) of 'a-'. A full list of rating actions is available at the end of this rating action commentary. KEY RATING DRIVERS IDRS and VR The IDRs of BAWAG are driven by its VR, which reflects the successful track record of its management in realigning the business model and improving its financial profile following the completion of its restructuring. The ratings also reflect the bank's effective risk management and generally conservative risk appetite, which includes a focus on high-quality assets in highly developed markets. The bank's asset quality is strong with NPLs at a low 2.4% of customer loans at end-1H16. The ratings also reflect BAWAG's planned significant growth in the medium term, especially through further opportunistic acquisitions of loan portfolios or other banks. While we expect that growth to remain well-controlled, this strategy carries heightened execution risk and may negatively affect the bank's profitability and capitalisation. The bank has some risk appetite for exposures to cyclical industries, particularly international commercial real estate, although this is mitigated by the bank's underwriting standards and risk controls. BAWAG's healthy performance record is supported by a strong focus on cost control, efficient processes and pricing discipline. Together with the bank's growing international presence, this compensates for the high competitive pressure in a relatively small home market in Austria. The ratings take into account a possible moderate dilution of BAWAG's strong capital ratios as the bank plans further acquisitions. At end-1H16, BAWAG's Fitch Core Capital (FCC)-to-risk-weighted assets (RWA) was strong at 17%, and the fully-loaded regulatory leverage ratio stood at 6.6%. We expect capitalisation to continue to compare favourably with peers, through a continuing flexible approach to profit distribution, which the bank resumed in 2016. The 'F1' Short-Term IDR is the higher of the two Short-Term IDRs possible for an 'A-' Long-Term IDR, which reflects Fitch's view of BAWAG's solid liquidity and funding. Its solid funding structure is underpinned by a large and stable customer deposit base - which accounts for 70% of total liabilities - and increasingly diversified wholesale market access. The bank also benefits from its established brand and strong retail franchise in Austria. SUPPORT RATING AND SUPPORT RATING FLOOR The Support Rating and SRF reflects our view that the EU's Bank Recovery and Resolution Directive (BRRD) and the Single Resolution Mechanism (SRM) are now sufficiently progressed to provide a resolution framework that is likely to require senior creditors participating in losses, if necessary, instead, or ahead, of a bank receiving sovereign support. The BRRD, which was implemented into Austrian legislation with its bail-in tool with effect from 1 January 2015, includes minimum loss absorption requirements before resolution financing or alternative financing (eg, government stabilisation funds) can be used. In addition, we do not factor into the rating any support from BAWAG's owners because Fitch generally views that support from financial investors, while possible, cannot be relied upon. RATING SENSITIVITIES IDRS and VR The Long-Term IDR is sensitive to changes to the VR. An upgrade of the VR would require a longer track record of generating resilient earnings and maintaining sound asset quality through the economic cycle and amid more adverse market conditions. An upgrade would also require a successful expansion and diversification of the bank's asset base, particularly the establishment of a solid franchise in its targeted international markets, including Germany and the UK, while maintaining a conservative risk appetite. A downgrade of the VR could arise from excessive, capital-eroding growth, significantly deteriorating internal capital generation that puts pressure on the bank's currently high capital ratios, or deterioration in the bank's risk profile or material increase in risk appetite. The Short-Term IDR is sensitive to changes to BAWAG's Long-Term IDR, or a worsening of the bank's funding and liquidity. SUPPORT RATING AND SUPPORT RATING FLOOR Any upgrade of the Support Rating and upward revision of the Support Rating Floor would be contingent on a positive change in the sovereign's propensity to provide support. This is highly unlikely, in our view, in light of the new regulatory regime. The rating actions are as follows: BAWAG P.S.K. Long-Term IDR assigned at 'A-'; Outlook Stable Short-Term IDR assigned at 'F1' Viability Rating assigned at 'a-' Support Rating assigned at '5' Support Rating Floor assigned at 'No Floor' Contact: Primary Analyst Krista Davies Director +44 203 350 1579 Fitch Ratings Limited 30 North Colonnade London E14 5GN Secondary Analyst Christian Schindler Associate Director +44 203 530 1323 Committee Chairperson Christian Scarafia Senior Director +44 203 530 1012 Media Relations: Christian Giesen, Frankfurt am Main, Tel: +49 69 768076 232, Email: christian.giesen@fitchratings.com. Additional information is available on www.fitchratings.com Applicable Criteria Global Bank Rating Criteria (pub. 15 Jul 2016) here Additional Disclosures Dodd-Frank Rating Information Disclosure Form here _id=1014399 Solicitation Status here Endorsement Policy here ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEB SITE AT WWW.FITCHRATINGS.COM. PUBLISHED RATINGS, CRITERIA, AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE, AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE CODE OF CONDUCT SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE. Copyright © 2016 by Fitch Ratings, Inc., Fitch Ratings Ltd. and its subsidiaries. 33 Whitehall Street, NY, NY 10004. Telephone: 1-800-753-4824, (212) 908-0500. Fax: (212) 480-4435. Reproduction or retransmission in whole or in part is prohibited except by permission. All rights reserved. In issuing and maintaining its ratings and in making other reports (including forecast information), Fitch relies on factual information it receives from issuers and underwriters and from other sources Fitch believes to be credible. Fitch conducts a reasonable investigation of the factual information relied upon by it in accordance with its ratings methodology, and obtains reasonable verification of that information from independent sources, to the extent such sources are available for a given security or in a given jurisdiction. The manner of Fitch's factual investigation and the scope of the third-party verification it obtains will vary depending on the nature of the rated security and its issuer, the requirements and practices in the jurisdiction in which the rated security is offered and sold and/or the issuer is located, the availability and nature of relevant public information, access to the management of the issuer and its advisers, the availability of pre-existing third-party verifications such as audit reports, agreed-upon procedures letters, appraisals, actuarial reports, engineering reports, legal opinions and other reports provided by third parties, the availability of independent and competent third- party verification sources with respect to the particular security or in the particular jurisdiction of the issuer, and a variety of other factors. Users of Fitch's ratings and reports should understand that neither an enhanced factual investigation nor any third-party verification can ensure that all of the information Fitch relies on in connection with a rating or a report will be accurate and complete. Ultimately, the issuer and its advisers are responsible for the accuracy of the information they provide to Fitch and to the market in offering documents and other reports. In issuing its ratings and its reports, Fitch must rely on the work of experts, including independent auditors with respect to financial statements and attorneys with respect to legal and tax matters. Further, ratings and forecasts of financial and other information are inherently forward-looking and embody assumptions and predictions about future events that by their nature cannot be verified as facts. As a result, despite any verification of current facts, ratings and forecasts can be affected by future events or conditions that were not anticipated at the time a rating or forecast was issued or affirmed. The information in this report is provided "as is" without any representation or warranty of any kind, and Fitch does not represent or warrant that the report or any of its contents will meet any of the requirements of a recipient of the report. A Fitch rating is an opinion as to the creditworthiness of a security. This opinion and reports made by Fitch are based on established criteria and methodologies that Fitch is continuously evaluating and updating. Therefore, ratings and reports are the collective work product of Fitch and no individual, or group of individuals, is solely responsible for a rating or a report. The rating does not address the risk of loss due to risks other than credit risk, unless such risk is specifically mentioned. Fitch is not engaged in the offer or sale of any security. All Fitch reports have shared authorship. Individuals identified in a Fitch report were involved in, but are not solely responsible for, the opinions stated therein. The individuals are named for contact purposes only. A report providing a Fitch rating is neither a prospectus nor a substitute for the information assembled, verified and presented to investors by the issuer and its agents in connection with the sale of the securities. Ratings may be changed or withdrawn at any time for any reason in the sole discretion of Fitch. Fitch does not provide investment advice of any sort. Ratings are not a recommendation to buy, sell, or hold any security. Ratings do not comment on the adequacy of market price, the suitability of any security for a particular investor, or the tax-exempt nature or taxability of payments made in respect to any security. Fitch receives fees from issuers, insurers, guarantors, other obligors, and underwriters for rating securities. Such fees generally vary from US$1,000 to US$750,000 (or the applicable currency equivalent) per issue. In certain cases, Fitch will rate all or a number of issues issued by a particular issuer, or insured or guaranteed by a particular insurer or guarantor, for a single annual fee. Such fees are expected to vary from US$10,000 to US$1,500,000 (or the applicable currency equivalent). The assignment, publication, or dissemination of a rating by Fitch shall not constitute a consent by Fitch to use its name as an expert in connection with any registration statement filed under the United States securities laws, the Financial Services and Markets Act of 2000 of the United Kingdom, or the securities laws of any particular jurisdiction. Due to the relative efficiency of electronic publishing and distribution, Fitch research may be available to electronic subscribers up to three days earlier than to print subscribers. For Australia, New Zealand, Taiwan and South Korea only: Fitch Australia Pty Ltd holds an Australian financial services license (AFS license no. 337123) which authorizes it to provide credit ratings to wholesale clients only. Credit ratings information published by Fitch is not intended to be used by persons who are retail clients within the meaning of the Corporations Act 2001

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below