Fitch Rates Credit Agricole S.A.'s Undated Deeply Subordinated Notes 'BB+(EXP)'

Wed Jan 8, 2014 11:47am EST

(The following statement was released by the rating agency) PARIS/LONDON, January 08 (Fitch) Fitch Ratings has assigned Credit Agricole S.A.'s (A/Stable/F1) expected undated deeply subordinated notes a 'BB+(EXP)' expected rating. The final rating is contingent upon final documents conforming to information already received. KEY RATING DRIVERS The notes are structured to qualify as additional Tier 1 Capital instruments with fully discretionary coupon payment and are subject to write-down on breach of Credit Agricole's (A/Stable/F1/a) consolidated 7% common equity Tier 1 (CET1) ratio, or on breach of Credit Agricole S.A.'s CET1 of 5.125%. Credit Agricole is not a single entity, but a cooperative banking group. Its 39 regional banks (caisses regionales) and central body (Credit Agricole S.A.) benefit from a cross-support mechanism. Accordingly, Credit Agricole and Credit Agricole S.A.'s Issuer Default Ratings are at the same level. The notes will be rated five notches below Credit Agricole's 'a' Viability Rating (VR) in accordance with Fitch's criteria for rating bank subordinated and hybrid securities. The notes are notched twice for loss severity and three notches for non-performance risk to reflect the fully discretionary coupon and the incremental risk due to the 7% CET1 ratio trigger compared with the risk reflected in the bank's VR. Fitch has assigned 50% equity credit to the securities. This reflects that the notes are perpetual, subordinated to all creditors except common equity, with full coupon flexibility. However, the write down is not necessarily permanent. In case of "return to financial health" Credit Agricole S.A. may partially or fully write-back the notes. The equity credit assigned to the securities could be raised to 100% if Fitch revises its criteria in line with "Assessing and Rating Bank Subordinated and Hybrid Securities - Exposure Draft" dated 27 November 2013 at The criteria revision proposed in the exposure draft would eliminate the current requirement for the write down to be permanent in order for an issue to obtain 100% equity credit. RATING SENSITIVITIES As the notes are notched from Credit Agricole's Viability Rating, their rating is primarily sensitive to any change in this rating. Contact: Primary Analyst Alain Branchey Senior Director +33 1 44 29 91 41 Fitch France S.A.S. 60 rue de Monceau 75008 Paris Secondary Analyst Sonia Trabelsi Director +33 1 44 29 91 42 Committee Chairperson Bridget Gandy Managing Director +44 20 3530 1095 Media Relations: Francoise Alos, Paris, Tel: +33 1 44 29 91 22, Email:; Hannah Huntly, London, Tel: +44 20 3530 1153, Email: Additional information is available on Applicable criteria, "Assessing and Rating Bank Subordinated and Hybrid Securities", dated 5 December 2012, "Banking Structures Backed by Mutual Support Mechanisms" dated 18 December 2013 and "Global Financial Institutions Rating Criteria," dated 15 August 2012, are available at Applicable Criteria and Related Research: Assessing and Rating Bank Subordinated and Hybrid Securities here Banking Structures Backed by Mutual Support Mechanisms here Global Financial Institutions Rating Criteria here Additional Disclosure Solicitation Status 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 WEBSITE '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. 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.