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Fitch Affirms CMB Leasing, CMB International Leasing at 'BBB'; Outlook Stable
May 8, 2017 / 5:26 AM / 7 months ago

Fitch Affirms CMB Leasing, CMB International Leasing at 'BBB'; Outlook Stable

(The following statement was released by the rating agency) TAIPEI, May 08 (Fitch) Fitch Ratings has today affirmed the Long-Term Issuer Default Ratings (IDR) of CMB Financial Leasing Co., Ltd. (CMB Leasing) and CMB International Leasing Management Limited (CMB International Leasing) at 'BBB'. The Outlooks on the ratings are Stable. Shanghai-based CMB Leasing, a wholly owned subsidiary of China Merchants Bank (CMB, BBB/Stable), provides equipment, shipping, and aviation leasing services. CMB International Leasing functions as the exclusive operating and treasury platform for the overseas business of CMB Leasing. In September 2016, the group changed the ownership structure of CMB International Leasing and made it a subsidiary under CMB Leasing through CMB Aviation and Shipping Financial Leasing in Shanghai Free Trade Zone. CMB is the seventh-largest commercial bank in China with total assets of CNY5.9 trillion at end-2016. KEY RATING DRIVERS CMB LEASING CMB Leasing's IDR is underpinned by our view of an extremely high probability of support from CMB given its strategic importance and close linkage to CMB as a core subsidiary. The company's leasing business complements its parent's commercial banking services, as Chinese banks are not allowed to provide leasing products directly to its clients. CMB Leasing leverages CMB's strong customer base and network to expand its leasing business. CMB has strong managerial and operational control over CMB Leasing. CMB Leasing's board of directors and senior managers are all appointed by CMB, and thus its operations, strategy, and risk management are highly integrated with those of its parent. CMB has a track record of providing ordinary support to CMB Leasing, and is required to provide capital and liquidity support should the need arise according to the articles of association of CMB Leasing and the China Banking Regulatory Commission's regulations on financial leasing companies. CMB Leasing still accounted for less than 3% of CMB's assets at end-2016 despite strong growth in recent years. CMB's Long-Term IDR of 'BBB' is driven by Fitch's high expectations the bank will receive the support from the Chinese government (A+/Stable) in the event of stress given its ownership structure and market position. Fitch expects sovereign support to be passed down to CMB Leasing through CMB in times of stress, given its role as a core subsidiary and close linkage with the parent. The Stable Outlook reflects our expectation that CMB Leasing's strategic role as a core subsidiary and its close operational integration with the parent will not change materially in the medium term. The Outlook is consistent with the Stable Outlook on the ratings of CMB and the Stable Outlook of China's sovereign rating. CMB INTERNATIONAL LEASING The ratings on CMB International Leasing reflect our assessment of an extremely high probability of support from CMB Leasing and CMB. CMB International Leasing is highly integrated into CMB Leasing's operation and is an important platform for CMB Leasing's overseas expansion. A default by CMB International Leasing would create significant reputational risks for CMB Leasing and its parent, CMB. RATING SENSITIVITIES CMB LEASING, CMB INTERNATIONAL LEASING Any signs of a decrease in the probability of support for CMB Leasing from its parent, CMB, would lead to a downgrade of the company's ratings. This could result from any weakening in the linkage between CMB Leasing and its parent. Any change in CMB's rating that reflects a shift in the perceived willingness or ability of China's government to support the bank in a full and timely manner is likely to affect CMB Leasing's rating in the same magnitude. The ratings on CMB International Leasing are directly correlated to any material change in the willingness or ability of CMB Leasing to provide support, if required. Likewise, any material change in the perceived willingness or ability of China's government to support CMB and CMB Leasing in a full and timely manner would affect the ratings on the issuer. Contact: Primary Analyst Shirley Hsu Associate Director +886 2 8175 7606 Fitch Australia Pty Ltd, Taiwan Branch Suite 1306, 13/F 205 Tun Hwa North Road Taipei 105, Taiwan Secondary Analyst Katie Chen Director +886 2 8175 7614 Committee Chairperson Mark Young Managing Director +65 6796 7229 Media Relations: Wai-Lun Wan, Hong Kong, Tel: +852 2263 9935, Email: Additional information is available on Applicable Criteria Global Non-Bank Financial Institutions Rating Criteria (pub. 10 Mar 2017) 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. 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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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