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Fitch Reviews Global Trading and Universal Banks
September 28, 2017 / 9:40 PM / 18 days ago

Fitch Reviews Global Trading and Universal Banks

(The following statement was released by the rating agency) LONDON/NEW YORK, September 28 (Fitch) Today Fitch Ratings concluded its periodic review of the Global Trading and Universal Banks (GTUBs). The peer group comprises 12 large and globally active banks. Fitch has affirmed the issuer ratings of 10 of the 12 GTUB parent entities. We upgraded UBS Group AG's Long-Term Issuer Default Rating (IDR) to 'A+' from 'A' to reflect our view that the group has improved its business by reducing tail risk, which should allow it to generate sound and less volatile earnings. We downgraded Deutsche Bank AG's Long-Term IDR to 'BBB+' because we see continued pressure on earnings, combined with a prolonged execution of its strategy. Following the review, the GTUB parent entities' Long-Term IDRs range from 'BBB+' for Deutsche Bank to 'AA-' for HSBC Holdings, with one GTUB parent (Credit Suisse Group AG) rated 'A-', three (BNP Paribas S.A., JPMorgan Chase & Co. and UBS Group AG) rated 'A+' and the others (Bank of America Corporation, Barclays plc, Citigroup, Inc., The Goldman Sachs Group, Inc., Morgan Stanley and Societe Generale S.A.) rated 'A'. All parent entities have Stable Outlooks. For detailed ratings and rationale, please refer to individual rating action commentaries released separately on each group. The GTUBs have streamlined group structures further as a result of resolution planning, and the groups have continued to build up debt buffers that protect certain senior creditors including counterparties and depositors. During the GTUB review, Fitch upgraded Societe Generale's senior preferred debt ratings to reflect the material size of the bank's debt buffers. We also assigned expected ratings to Barclays' and HSBC's domestic 'ring-fenced' banks, which the groups will have to establish to comply with UK legal requirements. Fitch expects that following the establishment of the new group structures, Barclays' two main operating companies' Long-Term IDRs will be rated one notch above their VRs and has therefore placed Barclays Bank Plc's Long-Term IDR on Rating Watch Positive (RWP). Fitch does not expect that the transfer of UK businesses will affect HSBC Bank plc's Long-Term IDR, which we affirmed at 'AA-'. We upgraded Societe Generale's senior preferred debt rating to 'A+', one notch above its Long-Term IDR, to reflect Fitch's view that the bank's buffer of additional tier 1, tier 2 and senior non-preferred debt is sufficient to recapitalise the bank after a resolution without causing losses to senior preferred creditors. We also upgraded the Derivative Counterparty Rating (DCR) by one notch and assigned deposit ratings at 'A+'/'F1' to reflect depositors' ranking as senior preferred creditors. The U.S. and Swiss GTUBs have had large debt buffers that protect operating company senior creditors for some time, and we rate the Long-Term IDRs, senior debt ratings and DCRs of several holding companies' operating subsidiaries one notch above the holding company's Long-Term IDR. Deutsche Bank's DCR and long-term deposit and structured notes ratings are one notch above the Long-Term IDR because derivatives, deposits and structured notes have preferential status over the bank's large buffer of qualifying junior debt and statutorily subordinated senior debt. Contact: Christian Scarafia Senior Director +44 20 3530 1012 Fitch Ratings Limited 30 North Colonnade London E14 5GN Bridget Gandy Managing Director +44 20 3530 1095 Joo-Yung Lee Managing Director +1-212-908-0560 Media Relations: Peter Fitzpatrick, London, Tel: +44 20 3530 1103, Email: peter.fitzpatrick@fitchratings.com; Sandro Scenga, New York, Tel: +1 212-908-0278, Email: sandro.scenga@fitchratings.com. Additional information is available on www.fitchratings.com 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. 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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

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