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Rating Action:

Moody's affirms A2/C+ ratings of Commerzbank International SA post merger

Global Credit Research - 19 May 2010

A2/C+ Ratings of Dresdner Bank Luxembourg S.A. withdrawn

Frankfurt, May 19, 2010 -- Moody's Investors Service has today affirmed the C+ bank financial strength rating (BFSR) and the A2 senior unsecured debt and deposit ratings of Commerzbank International S.A. (CISAL), located in Luxembourg, following a review of the rating in the context of the bank's merger with Dresdner Bank Luxembourg S.A. (DreBa Lux). The merger became legally effective on 1 April 2010, with financial and tax reporting effects retroactive to 1 January 2010. The ratings of the two banks had already been aligned on 23 October 2009 in view of the forthcoming merger. The Prime-1 short-term rating of CISAL was also affirmed. The outlook on all ratings is stable.

Concurrently, Moody's has withdrawn the A2/Prime-1 long-term and short-term deposit ratings and the C+ BFSR of DreBa Lux as the bank has ceased to exist and has been replaced by CISAL in all its legal relationships. CISAL has also assumed all outstanding debts of DreBa Lux.

MERGER TO ESTABLISH NEW BUSINESS SET UP; FOCUS ON PRIVATE WEALTH MANAGEMENT

The merger of the two subsidiaries in Luxembourg consolidates the group's private wealth management activities for both German and international private clients within one subsidiary. As part of the business realignment, CISAL's other banking activities, such as corporate lending and precious metals trading, will be transferred to the Luxembourg branch of Commerzbank AG (Aa3/Prime-1/C-, negative) in due course.

"CISAL's future focus on private wealth management in Luxembourg will not only allow for a leaner structure and cost savings, it will also reduce the current risk profile of the newly merged entity as large parts of risk-carrying assets will be off-loaded," says Katharina Barten, Vice President and Lead Analyst for Commerzbank Group at Moody's in Frankfurt.

"Although the restructuring will result in a smaller franchise, and some of the EUR1.4 billion total capital will be subject to a transfer to Commerzbank AG together with the bank's loan portfolios, Moody's currently does not expect any material adverse effects on the credit profile, partly as the target level of the bank's Tier 1 ratio of 10% to 12% would be in line with the current rating level," adds Ms. Barten.

VERY HIGH PROBABILITY OF CONTINUED PARENTAL SUPPORT

CISAL currently benefits from a Letter of Comfort from Commerzbank AG, which, in Moody's view, constitutes a strong commitment to support its subsidiary, albeit not to the same extent as a guaranty. The rating agency recognises that this support continues to be available for the merged entity.

While this support does not currently result in any rating uplift for the long-term ratings from the A2 Baseline Credit Assessment (BCA, which directly maps from the C+ BFSR), it does provide for a high level of rating stability at this level, even in the event of a possible deterioration of CISAL's intrinsic financial strength.

RATING HISTORY AND MOODY'S METHODOLOGIES

The last rating action on CISAL and DreBa Lux was implemented on 23 October 2009 when Moody's aligned both banks' ratings at the current level.

The principal methodologies used in rating Commerzbank International Luxembourg S.A. were Moody's "Bank Financial Strength Ratings: Global Methodology" and "Incorporation of Joint Default Analysis into Moody's Bank Ratings: A Refined Methodology", available on www.moodys.com in the Rating Methodologies sub-directory under the Research & Ratings tab. Other methodologies and factors that may have been considered in the process of rating these issuers can also be found in the Rating Methodologies sub-directory on Moody's website.

Headquartered in Luxembourg, CISAL reported total assets of EUR9.6 billion at the end of December 2009 and a net profit of EUR12.4 million for the full year.

Headquartered in Luxembourg, Dresdner Bank Luxembourg S.A. reported total assets of EUR5.3 billion at the end of December 2009 and a net profit of EUR11.4 million for the full year.

Frankfurt
Katharina Barten
VP - Senior Credit Officer
Financial Institutions Group
Moody's Deutschland GmbH
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454

Frankfurt
Carola Schuler
Managing Director
Financial Institutions Group
Moody's Deutschland GmbH
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454

Moody's affirms A2/C+ ratings of Commerzbank International SA post merger
No Related Data.

 

© 2013 Moody's Investors Service, Inc. and/or its licensors and affiliates (collectively, "MOODY'S"). All rights reserved.

 


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