July 10, 2017 / 9:37 AM / in 4 months

Fitch Rates Bank of Ireland Group plc 'BBB-'; Outlook Positive

(The following statement was released by the rating agency) LONDON, July 10 (Fitch) Fitch Ratings has assigned Bank of Ireland Group plc (BOIG) a Long-Term Issuer Default Rating (IDR) of 'BBB-', a Viability Rating (VR) of 'bbb-' and a Short-Term IDR of 'F3'. The Outlook on the Long-Term IDR is Positive. A full list of rating actions is at the end of this commentary. BOIG is the newly established holding company and ultimate parent of the Bank of Ireland group and its ratings are equalised with those of its wholly-owned subsidiary, Bank of Ireland (BOI; BBB-/Positive/bbb-), the group's main operating subsidiary. The establishment of BOIG as a holding company is part of a reorganisation aimed at improving the ability to resolve the group in line with the Single Resolution Board and Bank of England's preference for a single point of entry approach to bank resolution once there is sufficient bail-in debt issued by the holding company. The single point of entry approach should allow for a bail-in of holding company debt without causing a default of the main operating subsidiaries. KEY RATING DRIVERS VR AND IDRS The ratings reflect the role of BOIG as the holding company of the Bank of Ireland group and are aligned with those of its main operating subsidiary, BOI. As a result, BOIG's ratings are driven by the same considerations that affect BOI's ratings. BOI's VR and IDRs' are primarily based on the bank's strong domestic franchise, strengthened capitalisation, normalised funding profile, sound liquidity, diversified revenue streams, and improving, albeit still weak, asset quality. (see 'Fitch Affirms Bank of Ireland and Allied Irish Banks; Outlooks Positive', dated 5 December 2016 and available on www.fitchratings.com). We expect BOIG to become the main debt-issuing entity of the group, issuing an increasing proportion of debt, including additional Tier 1 (AT1) and other hybrid instruments and senior debt. Fitch believes that double leverage is unlikely to increase above 120%, a level at which we would consider notching the holding company's VR and Long-Term IDR below the bank's ratings. This is based on our expectation that the proceeds of any future debt issued at the holding company level will be down-streamed to its operating subsidiaries in the form of internal notes with identical subordination and maturity, therefore avoiding the build-up of additional double leverage at the holding company level. The equalisation of BOIG's VR and IDRs with BOI's also reflects our expectation of no material restrictions to the transfer of capital and liquidity across the group subject to the operating companies meeting regulatory capital and liquidity requirements. SUPPORT RATING (SR) AND SUPPORT RATING FLOOR (SRF) BOIG's Support Rating of '5' and Support Rating Floor of 'No Floor' reflect Fitch's view that senior creditors cannot rely on extraordinary support from the Irish authorities in the event that the group becomes non-viable. In our opinion, the EU's Bank Recovery and Resolution Directive (BRRD) and the Single Resolution Mechanism (SRM) provide a framework that is likely to require senior creditors to participate in losses for resolving the group. RATING SENSITIVITIES VR AND IDRS As BOIG's VR and IDRs are equalised with BOI's, they are sensitive to the same factors as BOI's. The Positive Outlook mirrors that on BOI's Long-Term IDR and reflects the potential for upgrading BOI's VRs and IDRs, should the bank continue to further improve its asset quality and strengthen its capitalisation, while continuing to generate satisfactory profits and maintain its sound funding and liquidity. BOIG's VR and IDRs could be notched down from BOI's ratings if double leverage at the holding company increases above 120% or if changing regulatory requirements materially restrict the ability to transfer capital across the group. SUPPORT RATING AND SUPPORT RATING FLOOR An upgrade to the SR and upward revision to the SRF would be contingent on a positive change in the sovereign's propensity to support its banks. While not impossible, this is highly unlikely in Fitch's view. The rating actions are as follows: Bank of Ireland Group plc Long-term IDR assigned at 'BBB-'; Outlook Positive Short-Term IDR assigned at 'F3' Viability Rating assigned at 'bbb-' Support Rating assigned at '5' Support Rating Floor assigned at 'No Floor' Contact: Primary Analyst Joanna Drobnik, CFA Director +44 20 3530 1318 Fitch Ratings Limited 30 North Colonnade London E14 5GN Secondary Analyst Marc Ellsmore Associate Director +44 20 3530 1438 Committee Chairperson Janine Dow Senior Director +44 20 3530 1464 Media Relations: Peter Fitzpatrick, London, Tel: +44 20 3530 1103, Email: peter.fitzpatrick@fitchratings.com. Additional information is available on www.fitchratings.com Applicable Criteria Global Bank Rating Criteria (pub. 25 Nov 2016) here Additional Disclosures Dodd-Frank Rating Information Disclosure Form here Solicitation Status here#solicitation 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. DIRECTORS AND SHAREHOLDERS RELEVANT INTERESTS ARE AVAILABLE here. 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 © 2017 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

Our Standards:The Thomson Reuters Trust Principles.
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