Bangkok--4 Aug--Fitch Ratings
Fitch Ratings (Thailand) has affirmed ING Bank N.V.’s (ING Bank) THB4.26bn senior unsecured bonds due 2016 at ‘AAA(tha)’. This follows the recent affirmation of ING Bank’s ratings on 24 July 2014 (see "Fitch Affirms ING Bank at 'A+'; ING Group at 'A'; Outlooks Negative" at www.fitchratings.com)
KEY RATING DRIVERS
The rating of the bonds is based on ING Bank’s Long-Term Foreign Currency Issuer Default Rating (IDR) of ‘A+’, which is higher than Thailand’s Long-Term Local Currency IDR of ‘A-’ and hence correlated to ‘AAA(tha)’, the highest rating on Thailand’s National rating scale.
ING Bank's IDR and senior debt ratings are at the bank’s 'A+' Support Rating Floor (SRF), reflecting Fitch's expectation that there remains an extremely high probability that the Dutch state (AAA/Stable) will support the bank, if required, given its systemic importance to the domestic economy and financial system.
The Negative Outlook on ING Bank’s 'A+' Long-Term IDR reflects Fitch's expectation that sovereign support for banks is likely to decline in the European Union (EU). See "Sovereign Support for Banks - Rating Path Expectations", dated 27 March 2014, available at www.fitchratings.com.
RATING SENSITIVITIES
The ‘AAA(tha)’ rating on ING Bank’s bonds is the highest on the national scale and, hence, no rating upside is possible.
A downgrade of the Thai baht-denominated bond’s rating is unlikely in the short to medium term. When regulatory initiatives that reduce state support for banks substantially are put in place, Fitch's base case for most EU banks (including ING Bank) is that their SRFs will be revised down to 'No Floor' in 2H14 or in 1H15, at which point these banks' Long-Term IDRs will be driven by their Viability Ratings (VR), which reflect their standalone creditworthiness. ING Bank’s Long-Term IDR is thus likely to be downgraded in 2H14 or in 1H15 but the bank’s 'a' VR would limit the downgrade of the Long-Term IDR to one notch. This means that ING Bank’s Long-Term Foreign Currency IDR is likely to fall to ‘A’, which is still above than Thailand’s Long-Term Local Currency IDR of ‘A-’.
ING Bank is the largest Dutch bank by total assets and it has a strong retail and commercial banking franchise in the Benelux region.
ING Bank’s other ratings are not affected and are as follows:
Long-Term IDR: 'A+'; Outlook Negative
Short-term IDR: 'F1+'
Viability Rating: 'a'
Support Rating: '1'
Support Rating Floor: 'A+';
Subordinated debt: 'A-'
Senior unsecured notes: 'A+/F1+'
Short-term senior unsecured notes: 'F1+'
Commercial paper: 'A+/F1+'