April 9 (The following statement was released by the rating agency)
Fitch Ratings says that commercial banks rated in
the 'AA'-category by Fitch are an elite group globally. In Europe, there are
only four of them: Rabobank Group is rated 'AA'/Negative Outlook, and HSBC
Holdings, Nordea Bank and Svenska Handelsbanken are rated
'AA-'/Stable Outlook.Key strengths of these banks include resilient business models over time,
capitalisation, substantial liquidity buffers and strong risk management.
Rabobank's Negative Outlook reflects credit fundamentals that on balance are
becoming more in line with, rather than superior to, its 'AA-' rated peers.
Capitalisation at each of the four banks continues to improve - both in volume
and in quality. This is in line with global banking trends, but these four banks
come from a higher starting point. Risk weighted assets benefit from low
weightings particularly on mortgage loans, and leverage ratios compare less
favourably with major banks' around the world, but are strong for large European
The three northern European banks have a structural reliance on wholesale
funding, while HSBC benefits from a large customer deposit base. Wholesale
funding reliance makes banks sensitive to market sentiment, which in turns means
that it is important that these three banks continue to outperform peers in most
metrics. These banks all retained very good access to the capital market during
the crisis, and liquidity is conservatively managed.
Asset quality at the four banks is solid - a function of the relatively safe
markets in which they primarily operate, as well as controlled risk appetite and
(especially in the Nordics) close regulatory oversight. Rabobank's and HSBC's
loan books are generally healthy; however, some asset quality indicators, such
as unreserved impaired loans as a proportion of equity, are weaker than those of
most of the 'AA'-category banks, only somewhat explained by conservative
Profitability levels at Handelsbanken, HSBC and Nordea Bank have remained
healthy. Rabobank's earnings generation has been structurally modest, although
resilient, compared with peers', and is further challenged by competitive
pressures on income and elevated loan impairment charges as a result of the weak
Dutch economic environment. Lower earnings at Rabobank historically have been
balanced by much better capitalisation than at highly rated peers; however, the
gap has now narrowed.