(The following statement was released by the rating agency)
March 01 - Fitch Ratings has revised the Rating Watch on Kredyt Bank’s (KB) Long-term Issuer Default Rating (IDR) of ‘BBB’ to Positive (RWP) from Evolving (RWE). The agency has also affirmed the support-driven ratings of Bank Zachodni WBK S.A. (BZ WBK), including its Long-term Issuer Default Rating (IDR) at ‘A-’ with a Negative Outlook and placed its ‘bbb’ Viability Rating (VR) on Rating Watch Negative (RWN).
The rating actions follow the statement made on February 28 by Banco Santander (‘A’/Negative) and KBC (‘A-'/Stable) announcing the agreement to merge their Polish banking subsidiaries. According to the agreement, BZ WBK will merge with KB by issuing new shares to KB’s shareholders in exchange for their shares in KB. On completion of the merger, Santander will be majority shareholder of the combined entity and KBC will hold a minority stake. The transaction is subject to regulatory approval from the Polish FSA and antitrust approval from the European Commission.
The Rating Watch Positive (RWP) on KB’s support-driven IDRs and Support Rating reflects Fitch’s view that these ratings are likely to be upgraded as a result of the merger. The merged entity’s IDRs will be underpinned by support from Santander.
Fitch will resolve the RWP on KB’s ratings and withdraw the ratings, once the legal merger is completed. According to the initial timetable, this is not expected before Q412.
The affirmation of BZ WBK’s support-driven ratings reflects Fitch’s view that the merged bank will continue to be of high strategic importance to Santander, resulting in a high propensity of the parent to provide support.
The RWN on BZ WBK’s VR highlights the fact that BZ WBK will be integrating with a weaker bank, as indicated by KB’s VR of ‘bb+', and that the standalone credit profile of the merged entity is likely to be moderately weaker than that of BZ WBK at present. In particular, Fitch expects the merged bank’s capital ratios, asset quality and performance to be slightly weaker than those of BZ WBK. At the same time, Fitch notes that the pre-merger BZ WBK is a relatively strong credit at the ‘bbb’ level, and any downgrade of the VR is likely to be limited to one notch.
Fitch will resolve the RWN on BZ WBK’s VR no later than upon completion of the legal merger. However, the agency also expects to review the VR following publication of BZ WBK’s audited 2011 financial statements and receipt of further information on the pro forma financial profile of the merged entity.
The rating actions are:
Long-term foreign currency IDR: ‘BBB’, Rating Watch revised to Positive from Evolving
Short-term foreign currency IDR: ‘F3’, Rating Watch revised to Positive from Evolving
Viability Rating: ‘bb+', placed on RWP
Support Rating: ‘2’, Rating Watch revised to Positive from Evolving
Bank Zachodni WBK S.A.
Long-term foreign currency IDR: affirmed at ‘A-', Outlook Negative
Short-term foreign currency IDR: affirmed at ‘F2’
Viability Rating: ‘bbb’, placed on RWN
Support Rating: affirmed at ‘1’