Bangkok--5 Jul--Fitch Ratings
Fitch Ratings (Thailand) affirmed ING Bank NV's (ING Bank) THB5.74bn and THB4.26bn senior unsecured bonds due 2014 and 2016 respectively at 'AAA(tha)'.
Key Rating Drivers
The rating of the bonds is based on ING Bank's Long-Term Foreign Currency Issuer Default Rating (LTFC IDR) of 'A+/Negative' (last affirmed on 11 April 2013, see "Fitch Affirms ING and ABN AMRO" dated 11 April 2013 on www.fitchratings.com), which is higher than Thailand's Long-Term Local Currency (LTLC) IDR of 'A-/Stable' and hence aligned with 'AAA(tha)', the highest rating on Thailand's National rating scale.
ING Bank's LTFC IDR and senior debt ratings are at the bank's Support Rating Floor (SRF) of 'A+' which is higher than the bank's Viability Rating (VR) of 'a', in line with Fitch's methodology. ING Bank's 'A+' SRF and LTFC IDR are driven by the Dutch state's ability (as indicated by its 'AAA/Negative' rating) and strong willingness, as perceived by Fitch, to support its systemically important domestic banks and not impose losses on their senior creditors, given a still unsettled eurozone crisis and related turbulence in the financial markets.
ING Bank's Negative Outlook is consistent with Netherlands' Negative Outlook as the bank's LTFC IDR is based on expected state support.
Rating Sensitivities
ING Bank's 'AAA(tha)' issue rating may be downgraded if the bank's SRF (hence LTFC IDR) is downgraded below Thailand's LTLC IDR. This could be caused by a multi-notch downgrade of the Netherlands' 'AAA' rating - which Fitch currently views as an unlikely prospect - or by a reduction in the Dutch state's willingness to provide support to its systemically important banks.
There is a clear political intention within the Europe Union to reduce implicit state support for systemically important banks, as demonstrated by a series of policy and regulatory initiatives aimed at curbing systemic risk posed by the banking industry. This will result in Fitch factoring less support into banks' IDRs in the medium term. ING Bank's SRF (hence IDRs) is therefore highly sensitive to a change in Fitch's view of the likelihood of authorities in Europe to provide full support to creditors in their banks.
However, given ING Bank's 'a' VR, the rating assigned to the bank's THB senior unsecured bonds is less vulnerable to a weakening of potential state support by the Dutch, than to a weakening of the standalone creditworthiness of the bank.
ING Bank is the largest Dutch bank by total assets; it has a strong retail and commercial banking franchise in the Benelux. It also has retail banking operations outside the Benelux in a number of countries, notably through its direct banking business ING Direct, and commercial banking activities are conducted in major global financial centres.