RPT-Fitch rates Bank Nusantara Parahyangan 'AAA(idn)'; outlook stable

Wed Jun 18, 2014 5:28am EDT

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June 18 (Reuters) - (The following statement was released by the rating agency)

Fitch Ratings has assigned Indonesia-based PT Bank Nusantara Parahyangan Tbk (BNP) a National Long-Term Rating of 'AAA(idn) and a National Short-Term rating of 'F1+(idn). The Outlook is Stable. 'AAA' National Ratings denote the highest rating assigned by Fitch on its national rating scale for that country. This rating is assigned to issuers or obligations with the lowest expectation of default risk relative to all other issuers or obligations in the same country.

'F1' National Ratings indicate the strongest capacity for timely payment of financial commitments relative to other issuers or obligations in the same country. On Fitch's National Rating scale, this rating is assigned to the lowest default risk relative to others in the same country. Where the liquidity profile is particularly strong, a "+" is added to the assigned rating.

KEY RATING DRIVERS

The ratings on BNP take into account Fitch's view of a high propensity of support from Mitsubishi UFJ Financial Group (MUFG)'s banking subsidiary, Bank of Tokyo Mitsubishi UFJ, Ltd (BTMU: 'A'/Stable), which is BNP's ultimate parent. ACOM CO., Ltd (ACOM: 'A-'/Stable), BNP's 66.15% majority shareholder, is 40%-owned by the MUFG group. In addition, BTMU directly holds 9.35% of BNP shares. In line with its criteria on rating financial institution subsidiaries and holding companies, Fitch views BNP as strategically important to MUFG's banking subsidiary through ACOM. Fitch also notes that BNP's presence in retail and small-medium enterprise (SME) will supplement BTMU's wholesale business growth in Indonesia.

Parent company's support is premised on appointment of key personnel from BTMU and ACOM, the transfer of product knowledge from ACOM, and technical assistance in the form of risk management and credit policy from BTMU. Fitch expects ACOM and BTMU to provide funding support to BNP, in time of need. BNP has received USD26m via a capital injection in 2013 from ACOM that has helped to support BNP's capital position.

RATING SENSITIVITIES

Any perceived weakening of support from or significant dilution in ownership by the ultimate parent, BTMU, may exert downward pressure on BNP's National Ratings. There is no rating upside for the National Ratings, which are already at the top end of the scale.

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