TEXT-Fitch affirms Postbank at 'A+'; outlook stable; affirms and withdraws viability rating
Fitch views the control and profit and loss transfer agreement (control agreement) between DB Finanz-Holding GmbH (not rated, a wholly-owned subsidiary of DB) and Postbank which was irrevocably validated by a German court in September 2012 as a very strong indication of support. Fitch expects Postbank's integration into DB to accelerate during the next three years, specifically including product standardisation and implementation of a common processing and distribution platform. Postbank's risk management has already been aligned with DB's and with the control agreement in place further alignments of risk management processes, methods and governance structure are now being executed.
The IDR is sensitive to any change in Fitch's view of DB and the creditworthiness of Federal Republic of Germany ('AAA'/Stable) or its currently high propensity to support systemically important banks.
RATING DRIVERS - VR
The affirmation of Postbank's VR reflects its stable retail franchise and resulting solid funding position as well as its improving risk return profile. It is constrained by the bank's modest capitalisation, and sizeable, albeit decreasing, risk and earnings pressure from its structured credit portfolio (SCP) and international commercial real estate (CRE) lending. Postbank is also highly exposed to GIIPS sovereigns and banks.
The withdrawal of the VR reflects the acceleration of integration into DB following the control agreement, which is making it increasingly less meaningful to analyse Postbank on a stand-alone basis.
Fitch notes that Postbank's profitability is likely to remain modest in the short-term, as the low interest rate environment and limited client activity in terms of commission income will limit improvements of revenues in Postbank's core businesses, retail and corporate banking. Yet Fitch believes the resulting pressure on earnings to be manageable, as Fitch expects some relief from efficiency gains.
Fitch does not expect any further serious deterioration in Postbank's impairment charges, in light of the high share of collateralised retail mortgage lending and the stabilisation in Postbank's UK and US commercial real estate exposure. However, some concentration at Postbank and exposure to GIIPS banks pose some large tail risks.
SUBORDINATED DEBT AND HYBRIDS
Postbank's subordinated debt instruments and hybrid instruments are notched from DB's 'a' VR. The notching captures the risks of non-performance and loss severity as set out in Fitch's criteria report 'Rating Bank Regulatory Capital and Similar Securities', dated 15 December 2011, The ratings are sensitive to any changes in Fitch's view of DB's financial strength.
PB FINANCE (DELAWARE), Inc
Fitch's ratings for PB Finance (Delaware)'s commercial paper programme are based on the unconditional guarantee by Postbank AG for the notes and Fitch's view that Postbank would honour this guarantee.
The rating actions are as follows:
Long-term IDR: affirmed at 'A+'; Stable Outlook
Short-term IDR: affirmed at 'F1+'
Viability Rating: 'bbb', affirmed and withdrawn
Support Rating: affirmed at '1'
Senior Debt, including programme ratings: affirmed at 'A+' / 'F1+'
Subordinated Lower Tier II Debt: affirmed at 'A-'
Unsecured guaranteed bonds issued by former DSL Bank: affirmed at 'AA'/'AA emr'
PB Finance (Delaware); Inc: commercial paper 'F1+' affirmed
Deutsche Postbank Funding Trust I (Germany): affirmed at 'BBB-'
Deutsche Postbank Funding Trust II (Germany): affirmed at 'BBB-'
Deutsche Postbank Funding Trust III (Germany): affirmed at 'BBB-'
Deutsche Postbank Funding Trust IV (Germany): affirmed at 'BBB-'
ProSecure Funding Limited Partnership (LP Jersey): affirmed at 'BBB-'
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