(Repeat for additiional subscribers)
May 12 (Reuters) - (The following statement was released by the rating agency)
Fitch Ratings has affirmed Germany-based Akbank A.G.’s (AAG) at Long-term Issuer Default Rating (IDR) at ‘BBB’, its Short-term IDR at ‘F3’ and its Support Rating at ‘2’. The Outlook is Stable.
KEY RATING DRIVERS - IDRs AND SUPPORT RATING
AAG’s IDRs are equalised with those of its 100% parent Akbank T.A.S. (Akbank, BBB/F3/bbb) of Turkey, and the ‘2’ Support rating reflects Fitch’s view that Akbank would have a high propensity to provide support to AAG, should this be required.
AAG is closely integrated with Akbank, as reflected in its shared senior management, risk and IT systems, branding and customer deal flows. Given the high degree of integration, Fitch does not assess AAG on a stand-alone basis. Therefore AAG does not have a Viability Rating.
AAG represents around 5% of the group’s consolidated assets and is small in relation to Akbank. However, AAG is Akbank’s flagship international subsidiary, through which Akbank conducts its cross-border expansion in Europe. AAG complements the product range Akbank provides to its large corporate clients and, in Fitch’s view, plays an important role within the group.
Corporate banking is one of Akbank’s key business lines, to which AAG contributes a significant portion in the form of foreign currency loans to leading Turkish companies, to German companies exporting to Turkey and to Turkish subsidiaries of leading European and German corporates. Fitch considers AAG as a core part of Akbank’s corporate banking unit, which further supports the rating equalisation.
The Stable Outlook mirrors that on Akbank’s ratings.
RATING SENSITIVITIES - IDRs AND SUPPORT RATING
AAG’s ratings are sensitive to a change in Akbank’s foreign currency IDR. Akbank’s Long-term foreign currency IDR is one notch above Turkey’s and there is potential for a single-notch downgrade to the level of the Turkish sovereign, if rapid loan growth resumes and capital and funding ratios continue to moderate.
AAG’s ratings may also be downgraded if a change in the strategy of Akbank leads Fitch to no longer view AAG as a core subsidiary of Akbank. Fitch, however, considers this scenario unlikely in the foreseeable future.
AAG’s ratings are also sensitive to changes in regulations in Turkey and in Germany that may reduce the advantages for Akbank of having a German subsidiary.