PARIS/LONDON, November 19 (Fitch) Last week's agreement for BNP
to buy Belgium's 25% stake in its BNP Paribas Fortis subsidiary
has benefits for
both the French bank and the Belgian state, Fitch Ratings says.
BNPP's group structure while continuing to enhance earnings, and
debt for Belgium.
BNPP's earnings already benefit from its majority ownership of
Fortis. The bank says the deal is likely to be accretive to
earnings per share
in 2013. It estimated synergies from the 75% majority stake at
EUR1.5bn in 2012,
largely owing to rationalisation of IT systems, and there were
revenues as BNPP's products were rolled out to BNP Paribas
Fortis clients. These
have continued into 2013. BNPP has also benefitted from the
amortisation of fair-value adjustments related to the BNP
acquisition (total adjustments of EUR6.8bn at purchase), but
this is no longer
material in 2013.
The deal would be neutral to BNPP's 'A+' rating. There would
also be no change
to the ratings of BNP Paribas Fortis, which are already
equalised with those of
BNPP, as we view it as a core subsidiary and expect support to
from the parent rather than the Belgian authorities. Belgium and
part of the group's core retail franchise and the original
acquisition of BNP
Paribas Fortis in 2009 has strengthened the customer base and
BNPP's solid capitalisation gives it the flexibility to expand
its franchise and
seize growth opportunities. Its fully loaded Basel III common
equity ratio of
10.8% at end-3Q13 exceeded management's target and compares well
domestic and international peers. The purchase will lower this
ratio by around
50bp, which is manageable. The deal will facilitate any further
assets and businesses between BNPP and its subsidiary.
The disengagement of the Belgian authorities is a sign that
banking sector risks
are receding in the country, although they are still high. The
transaction should generate a capital gain of around EUR900m for
state and reduce 2013 debt by around 0.9% of GDP. However,
pressures in 2013-2014 and slower fiscal consolidation than
has led us to extend our public debt peak estimate of 100% of
GDP to 2014, from
2013. We believe public debt dynamics remain within the
tolerance of the 'AA'
sovereign rating, which we affirmed today.
The Belgian state remains a major shareholder of BNP Paribas
(10.3% of the
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