February 6, 2014 / 5:36 PM / in 4 years

Fitch Affirms Fimbank at 'BB'; Outlook Stable

(The following statement was released by the rating agency) MILAN/PARIS/LONDON, February 06 (Fitch) Fitch Ratings has affirmed Malta-based Fimbank Plc's (FIM) Long-term Issuer Default Rating (IDR) at 'BB' with a Stable Outlook. The Viability Rating (VR) has also been affirmed at 'bb'. A full list of rating actions is provided at the end of this rating action commentary. KEY RATING DRIVERS - IDRs and VR The affirmation of FIM's VR and IDRs is based on the bank's plans to increase its capitalisation significantly under its new ownership structure and on the available, low-cost funding expected from its new majority shareholder. These two elements compensate for the rating pressure arising from its weaker asset quality than peers and its volatile earnings. The Stable Outlook reflects the capital already strengthened by the KIPCO group, FIM's new ultimate shareholder, and the additional capital which the bank is expected to receive by the KIPCO group in 2014. However, the new ownership structure, with one dominant shareholder, could result in some uncertainties around potential changes to both the management team and current strategic directions, although KIPCO has committed to develop the current business model and strategy of FIM. The ratings also reflect the bank's niche focus on trade finance, with strong relationships in a number of emerging markets, predominantly in the Middle East and North Africa, and its high asset concentration. RATING SENSITIVITIES - IDRs and VR FIM's ratings are sensitive to a material increase in its risk appetite, which could result from a change of strategy under its new ownership. Further deterioration of asset quality, higher concentration of its exposures and failure to generate more substantial and stable operating profits could lead to a downgrade. An upgrade is currently unlikely as the rating affirmation already takes into account expected improvements in capitalisation, profitability and funding. KEY RATING DRIVERS - Support Rating and Support Rating Floor Although the bank would first look for support from the KIPCO group, the availability of such support cannot currently be ascertained by Fitch and is therefore not factored into the ratings. The Support Rating of '5' and Support Rating Floor of 'No Floor' therefore reflect possible support from the Maltese authorities but which in Fitch's view cannot be relied upon. RATING SENSITIVITIES - Support Rating and Support Rating Floor Currently, the bank's Support Rating at '5' is sensitive to the rating and propensity of Malta to provide support. Fitch will assess the new shareholder's ability and propensity to provide support to the bank on a timely basis as and when required, which may result in an upgrade of the Support Rating and withdrawal of the Support Rating Floor. The rating actions are as follows: Long-term IDR: affirmed at 'BB'; Outlook Stable Short-term IDR: affirmed at 'B' Viability Rating: affirmed at 'bb' Support Rating: affirmed at '5' Support Rating Floor: affirmed at 'No Floor' Contact: Primary Analyst Francesca Vasciminno Senior Director +39 02 87 90 87 225 Fitch Italia S.p.A. V.lo S. Maria alla Porta 1 20121 Milan Secondary Analyst Manuela Banfi Associate Director +39 02 879087 202 Committee Chairperson Olivia Perney Guillot Senior Director + 33 1 44 29 91 74 Media Relations: Hannah Huntly, London, Tel: +44 20 3530 1153, Email: hannah.huntly@fitchratings.com. Additional information is available on www.fitchratings.com Applicable criteria, Global Financial Institutions Rating Criteria, dated 31 January 2014, are available at www.fitchratings.com. Applicable Criteria and Related Research: Global Financial Institutions Rating Criteria here Additional Disclosure Solicitation Status here ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

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