(The following statement was released by the rating agency)
BARCELONA/MILAN/LONDON, June 07 (Fitch) Fitch Ratings has
affirmed Instituto de
Credito Oficial's (ICO) Long-term Issuer Default Rating (IDR) at
Short-term IDR at 'F2', Support Rating at '2' and Support
Rating Floor at
'BBB'. The Outlook on ICO's Long-Term IDR is Negative.
At the same time, Fitch has affirmed ICO's long-term programme
long-term senior debt issues at 'BBB', market linked securities
at 'BBBemr' and
short-term programme ratings and commercial paper issues at
'F2'. A full list of
rating actions is at the end of this rating action commentary.
KEY RATING DRIVERS - IDRS, SR, SRF AND SENIOR DEBT
Instituto de Credito Oficial's (ICO) IDRs and senior debt
ratings are based on
support from its 100% shareholder, the Kingdom of Spain
rating equalisation between ICO and Spain reflects the explicit,
unconditional and direct guarantee provided by the Spanish state
on all ICO's
financial debt, with no time limit.
ICO's ratings also factor in the strong control and supervision
ICO and the state, the credit institution's high strategic
importance to the
Spanish government and Fitch's expectations of continued capital
ICO is a state credit institution providing medium and
longer-term lending to
the private and public sector to foster economic and social
Spain. Lending is driven by the Spanish government's policies.
The CEO is
appointed by the government, which also sets annual debt limits
for ICO and
exerts public control over it.
In addition to its ordinary lending activity, ICO supported
communities to refinance their debt maturities in H112 granting
ad-hoc loans. It also contributed EUR6.3bn to a special purpose
aimed at paying arrears of local governments. This reinforces
of ICO's very high strategic importance to the state, which is
by Fitch's opinion that no other bank could currently replace
ICO's role as the
state's financial arm.
Fitch believes the Spanish government will continue providing
above the current legislative commitment. Although according to
Act 42/2006 the
Spanish government is committed to keep ICO's Tier 1 ratio above
9.5%, the ratio
was higher at 15.7% at end March 2013, up from 12.3% in 2011.
This followed a
EUR520m capital injection in 2012. Fitch expects ICO's capital
to remain good
quality in 2013-2014, comprising only equity and retained
The Negative Outlook reflects the Negative Outlook on Spain's
Fitch does not assign a Viability Rating to ICO as its business
entirely dependent on the support of its state guarantor.
RATING SENSITIVITIES - IDRS, SR, SRF AND SENIOR DEBT
ICO's IDRs, Support Rating, Support Rating Floor and senior debt
based on the explicit guarantee on ICO's debt. ICO's ratings and
therefore move in tandem with those of the Spanish sovereign.
ICO's IDRs are also sensitive to changes in the bank's strategic
the state, which Fitch currently does not expect.
The rating actions are as follows:
Long-term IDR affirmed at 'BBB'; Outlook Negative
Short-term IDR affirmed at 'F2'
Support Rating affirmed at '2'
Support Rating Floor affirmed at 'BBB'
Long-term programme and long-term senior debt affirmed at
Market-linked securities affirmed at 'BBBemr'
Short-term programme and commercial paper affirmed at 'F2'
+34 93 323 8406
Fitch Ratings Espana, S.A.U.
Paseo de Gracia 85, 7th Floor
Erwin Van Lumich
+34 93 323 8403
Maria Jose Lockerbie
+44 20 3530 1083
Media Relations: Hannah Huntly, London, Tel: +44 20 3530 1153,
Additional information is available on www.fitchratings.com
Applicable criteria 'Global Financial Institutions Rating
Criteria' dated 15
August 2012, are available on www.fitchratings.com.
Applicable Criteria and Related Research:
Global Financial Institutions Rating Criteria
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