(The following statement was released by the rating agency)
Sept 19 - Fitch Ratings does not expect any rating impact on Landesbank
Hessen-Thueringen Girozentrale's (Helaba; 'A+'/Stable/'F1+') outstanding public
sector Pfandbriefe which are currently rated 'AAA' with a Stable Outlook, after
the completion of the transfer of Portigon's (previously called WestLB) public
sector programme into Helaba's public sector programme as of 17 September 2012.
Even though the public sector cover pools have not been managed jointly, Fitch
expects no rating impact due to the combined current nominal
overcollateralisation (OC) providing sufficient protection and Helaba's
Long-term Issuer Default Rating (IDR).
As of 30 June 2012, Helaba's outstanding public sector Pfandbriefe amounted to
EUR15.6bn, backed by a cover pool of EUR19.5bn, leading to a nominal OC of
25.0%. Combined with Portigon's programme, as of 31 August 2012 the outstanding
public sector Pfandbriefe would increase to EUR21.7bn (+28.1%), backed by a
cover pool of EUR27.3bn (+28.6%). Hence, the merger would lead to a slight
increase of the nominal OC to 25.8%.
Fitch has not run a full analysis on the combined cover pool. However, the
agency is of the opinion that the provided data indicates the credit risks for
the combined pool should generally be in line with the risks calculated for
Helaba's cover pool on a standalone basis. Both pools have a high credit link to
Germany (around 25%), a high exposure to German borrowers (around 90%) and
generally to borrowers situated in 'AAA'-rated countries (around 95%).
Fitch additionally expects no significant change in market risks. More than 95%
of the assets and liabilities are denominated in EUR. The former Portigon pool
tends to reduce the open FX positions by around 2.5%. Interest rate risks tend
to heighten as the relative open interest rate position increased to 16.2% based
on end of August data compared to 7.3% for Helaba's public sector programme on a
standalone basis at end-April 2012. The asset and liability profile of the
combined pool is better matched in the agency's view.
The integration is also unlikely to change Fitch's view on Helaba's
Discontinuity cap (D-cap) of 5 (low risk). Whereas the assessments for 'asset
segregation' and 'systemic alternative management' are driven by the legislation
and will remain unchanged, also no changes in the assessments of the 'liquidity
gap and systemic risk', 'cover pool-specific alternative management' and
'privileged derivatives' are expected as Helaba will manage the combined cover
pool and the overall characteristics of the pool will remain stable.
For all of Fitch's Eurozone Crisis commentary go to here
(Caryn Trokie, New York Ratings Unit)