Oct 09 – Fitch Ratings has affirmed Credit Agricole’s
(CA) Long-term Issuer Default Rating (IDR) at ‘A+’ with a Negative Outlook and
Short-term IDR at ‘F1+’. At the same time, the agency has affirmed the Viability
Rating (VR) at ‘a’, Support Rating Floor at ‘A+’ and Support Rating at ‘1’. A
full list of rating actions is at the end of this rating action commentary.
RATING ACTION RATIONALE
CA’s Long- and Short-term IDRs, Support Rating and Support Rating Floor continue
to reflect the potential support from France (‘AAA’/Negative), if required. The
Negative Outlook on CA’s Long-term IDR reflects that of France’s Long-term IDR.
CA is not a single entity, but a cooperative banking group. Its 39 regional
banks (caisses regionales; CRs) and central body (Credit Agricole S.A.; CA S.A.)
benefit from a cross-support mechanism. Fitch has the same IDRs for CA and CA
S.A. Fitch considers there to be an extremely high probability that support from
the French authorities would be forthcoming if needed. CA is the leading French
retail bank (with a 25% market share of customer deposits) and is systemically
important.
CA’s VR reflects its strong French retail franchise, solid overall asset
quality, limited market risk and solid funding base. It also considers CA’s
modest profitability, an only adequate Fitch Core Capital ratio and exposure to
southern Europe. CA is focusing on the mature low-risk/low-return French retail
banking activities more than many of its peers and has reduced its ambitions in
corporate and investment banking (CIB). The group has also largely implemented
an adjustment plan to reduce its funding needs.
RATING DRIVERS AND SENSITIVITIES – IDRS, SUPPORT RATING AND SUPPORT RATING FLOOR
CA’s Long- and Short-term Term IDRs are driven by support and the Long-term IDR
is at the same level as its Support Rating Floor. The Long- and Short-Term IDRs,
Support Rating and Support Rating Floor would be sensitive to a decrease in
France’s ability (as measured by its rating) or willingness to support CA. A
downgrade of France’s Long-term IDR by one notch (to ‘AA+’) would lead to a
downgrade of CA’s Support Rating Floor and Long-term IDRs to ‘A’ and Short-term
IDR to ‘F1’. These ratings could also be downgraded if Fitch came to the
conclusion that government support in France was being diluted through a
combination of regulatory, legal and political changes.
Continued…
