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Fitch Assigns ProCredit Bank AG 'BBB' Rating; Outlook Stable
March 30, 2017 / 1:16 PM / 4 months ago

Fitch Assigns ProCredit Bank AG 'BBB' Rating; Outlook Stable

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(The following statement was released by the rating agency) WARSAW/LONDON, March 30 (Fitch) Fitch Ratings has assigned ProCredit Bank AG (PCBDE) a Long-Term Issuer Default Rating (IDR) of 'BBB' with a Stable Outlook, a Short-Term IDR of 'F2' and a Support Rating of '2'. The ratings are driven by institutional support from PCBDE's parent ProCredit Holding AG & Co. KGaA (PCH, BBB/Stable). A full list of rating actions is at the end of this commentary. Fitch does not assign a Viability Rating to PCBDE because the bank does not have a meaningful standalone franchise, and its operations rely strongly on integration within the broader group. KEY RATING DRIVERS IDRS AND SUPPORT RATINGS PCBDE's Support Rating and the equalisation of the bank's IDRs with those of PCH reflect Fitch's view of a high likelihood of parental support. This view is based primarily on the bank's treasury role within the group and a strong legal commitment in the form of a profit and loss sharing agreement, which obliges PCH to replenish PCBDE's equity should the latter suffer a loss. The Stable Outlook reflects that of the parent. The bank's role in the group is focused on providing treasury, clearing and liquidity management services to sister banks located across south-eastern Europe, CIS and South America. At end-2016 about 60% of PCBDE's assets were cash and other liquid assets, mainly interbank placements, with highly rated German banks. Funding provided to PCH group sister banks and co-financing of some of their large credit exposures accounted for 25% and 10% of assets at end-2016, respectively. The group's international payments clearing has been centralised at PCBDE. PCBDE's other operations still have a narrow scale and are largely limited to providing financing to German SMEs and renewable energy producers with a medium-term goal of widening the business with German firms active in south-east and eastern Europe. PCBDE is also attracting deposits from local customers, although funding at present comes primarily from other group banks. The bank is a regulatory anchor for the group's consolidated supervision by BaFin and Bundesbank. Fitch believes the regulator would be supportive of any measures by PCH to protect German deposits and ensure the bank's viability. A profit and loss transfer agreement between the parent and the bank includes a provision requiring a capital injection by the parent if PCBDE's regulatory total capital ratio falls below 13%. PCH's IDRs and Support Rating are driven by Fitch's view of the potential support it can expect to receive from its core international financial institution shareholders (KfW, the International Finance Corporation and DOEN Foundation had a combined stake of 39% at end-2016). These entities, together with other core shareholders Zeitinger Invest and ProCredit Staff Invest, have strategic control over the group through their status as shareholders of the general partner within the KGaA structure. Fitch's view of support is based on the long-term and strategic commitment of the international financial institution shareholders, as highlighted by their role within PCH's structure, the alignment of their own missions of development finance with that of PCH, and a track record of debt and capital support to PCH and its subsidiary banks. DEPOSIT RATINGS PCBDE's Deposit Ratings are aligned with the bank's IDRs. No Deposit Rating uplift has been given because in Fitch's view the bank's qualifying debt buffers would not afford any obvious additional benefit over and above the support benefit already factored into the bank's IDRs even if they reach a sufficient size in the future. RATING SENSITIVITIES IDRS AND SUPPORT RATINGS PCBDE's IDRs and Support Ratings are sensitive to changes in PCH's IDRs. Changes in Fitch's view of the parent's propensity to support the bank could also negatively affect the rating, but we view these as unlikely. DEPOSIT RATINGS PBCDE's deposit ratings are primarily sensitive to changes in the bank's IDRs. The rating actions are as follows: ProCredit Bank AG Long-Term IDR assigned at 'BBB'; Outlook Stable Short-Term IDR assigned at 'F2' Support Rating assigned at '2' Long-Term Deposit Rating assigned at 'BBB' Short-Term Deposit Rating assigned at 'F2' Contact: Primary Analyst Artur Szeski Senior Director +48 22 338 6292 Fitch Polska S.A. Krolewska 16 00-103 Warsaw Secondary Analyst Jakub Kopiec, CFA Analyst +48 22 330 6702 Tertiary Analyst Lola Yusupova Associate Director +49 69 768 076 114 Committee Chairperson James Watson Managing Director +7 495 956 6657 Media Relations: Elaine Bailey, London, Tel: +44 203 530 1153, Email: elaine.bailey@fitchratings.com; Rebecca O'Neill, London, Tel: +44 203 530 1697, Email: rebecca.oneill@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 _id=1021361 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 <a href="https://www.fitchratings.com">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 AT <a href="https://www.fitchratings.com/site/regulatory">HTTPS://WWW. FITCHRATINGS.COM /SITE/REGULATORY. 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. 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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. 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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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