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June 19 (Reuters) - (The following statement was released by the rating agency)
Fitch Ratings has assigned Turkey’s Alternatif Finansal Kiralama A.S. (Alease) Long-term foreign and local currency Issuer Default Ratings (IDRs) of ‘BBB’ and ’ BBB+', respectively, Short-term foreign and local currency IDRs of ‘F3’ and ‘F2’, respectively, a National Long-term rating of ‘AAA(tur)’ and a Support Rating of ‘2’. The Outlooks on the Long-term ratings are Stable.
Alease’s ratings are equalised with those of its parent Alternatif Bank A.S. (Abank: BBB/Stable) and reflect the high potential of support from Abank, which has been the company’s 100%-owner since 2013. Nevertheless, Fitch believes that support, if needed, is likely to be provided by Abank’s ultimate parent, Commercial Bank of Qatar (CBQ, A/Stable).
In Fitch’s view, Abank is strategically important to CBQ and to date, is CBQ’s largest international acquisition. Alease, which provides finance leasing to small and medium sized companies (SMEs), complements Abank’s product range in the fairly competitive Turkish banking sector.
The ratings also reflect common branding and high reputational risk for Abank and high integration. Alease’s board of directors now includes Abank’s CEO and CBQ’s CEO in addition to three other members from Abank’s board of directors (one of whom was CBQ’s CFO until 2013). Alease’s activity is also supervised by Abank through common risk, audit and asset and liabilities management committees. The bank provides support in terms of product distribution (44% of Alease’s sales were realised by the bank’s branch while the referral target for 2014 is 50%), technology and other operational functions.
Regulations in Turkey limit banks’ ability to offer leasing services directly, necessitating the establishment of separate legal entities. Alease is a mid-sized leasing company, ranking 11th out of 22 leasing companies by assets at end-2013. Alease was established in 1997 by Abank and was acquired by Abank’s then major shareholder - Anadolu Endustri Holding AS (Anadolu) in 2003. In July 2013, CBQ acquired majority ownership (70%) of Abank (see ‘Fitch Upgrades Alternatifbank on Ownership Change’, published on 23 July 2013) and in November 2013, Abank acquired back ownership of Alease from Anadolu.
Alease’s IDRs are equalised with those of its parent and any rating action on Alease’s IDRs is likely to mirror that on Abank’s IDRs.