A2/C+ Ratings of Dresdner Bank Luxembourg S.A. withdrawn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Concurrently, Moody's has withdrawn the A2/Prime-1 long-term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as the bank has ceased to exist and has been replaced by CISAL in all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