TEXT-Fitch affirms Europejski Fundusz Leasingowy S.A. at 'A'; outlook negative

Tue Dec 11, 2012 6:23am EST

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(The following statement was released by the rating agency)

Dec 11 - Fitch Ratings has affirmed Poland-based Europejski Fundusz Leasingowy S.A.'s (EFL) Long-Term Issuer Default Rating (IDR) at 'A' and National Long-Term rating at 'AA+'(pol). The Outlook on both ratings is Negative. A full list of rating actions is at the end of this rating action commentary.

RATING ACTION RATIONALE AND DRIVERS- IDRS, NATIONAL RATINGS, SUPPORT RATING

The affirmation reflects Fitch's view that there is an extremely high probability EFL would be supported, if needed, by its 100% ultimate shareholder, Credit Agricole (CA, 'A+'/Negative). The shares in EFL are directly held by CA's 100% subsidiary, Credit Agricole S.A. (CA S.A.). In assessing the probability of support, Fitch views positively the close integration with and supervision by the parent, CA's plans to develop its business on the Polish market, significant provision of non-equity funding to EFL by CA and EFL's very small size relative to the group.

EFL, with its large and stable customer base of small and medium enterprises (SMEs), plays an important role in ongoing expansion of CA's Polish bank subsidiary, Credit Agricole Bank Polska, aimed at rebalancing the traditionally consumer bank into a universal institution. CA has also added its name to EFL's logo this year. The elimination of the EFL name is not on the agenda due to the strong recognition and reputation of the brand.

EFL's reliance on the parent for funding is substantial. However, the company's wholesale funding sources are reasonably diversified. The proportion of funding directly from or guaranteed by the parent was 52% at end-H112. Total funding included loans from international financial institutions (38% of total), commercial banks (34%) and bonds (10%).

Liquidity risk is low due to EFL's policy of matched funding. Any potential roll-over risk related to the short-term bonds issued is mitigated by support available from CA.

RATING SENSITIVITIES- IDRS, NATIONAL RATINGS, SUPPORT RATING

EFL's IDR, National Long-Term and Support Ratings would likely be downgraded if CA's Long-Term IDR was downgraded. The latter is at its Support Rating Floor and has a Negative Outlook, reflecting its sensitivity to any changes in the French sovereign rating. The Negative Outlooks on EFL's Long-Term IDR and National Long-Term Rating reflect that on the parent.

EFL has been the leader in the Polish leasing market since the early 1990s. It accounted for 9.6% of total assets financed by leasing at end-Q312. The company mainly offers finance leasing to SMEs, with a particularly strong position in the vehicle segment.

The rating actions are as follows:

Long-Term IDR affirmed at 'A'; Outlook Negative

Short-Term IDR affirmed at 'F1'

National Long-Term Rating: affirmed at 'AA+'(pol); Outlook Negative

National Short-Term Rating: affirmed at 'F1+'(pol)

Support Rating: affirmed at '1'

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