MOODY'S CONFIRMS RATINGS OF ING BANK (SENIOR AT Aa2) AND RELATED COMPANIES; REVIEW RATINGS OF BHF BANK (SENIOR AT A1) FOR POSSIBLE UPGRADE
Moody's Investors Service confirmed the long-term and financial strength ratings for ING-Bank at Aa2 and B+ respectively, while maintaining a negative rating outlook, following the ING Group's offer to increase its shareholding in Frankfurt-based BHF-Bank to 100%. The rating agency also placed the A1 long-term and C+ financial strength ratings of BHF-Bank AG on review for possible upgrade.
Moody's said that the announced acquisition, the largest cross-border acquisition of a German bank to date, is a strategic positive for the ING group, providing a solid foothold in the German corporate middle market, as well as in Germany's growing market for institutional and private client asset management. The transaction involves a substantial premium, but it will be partly funded by the proceeds of other divestitures and will be accretive to earnings almost immediately.
Moody's noted that the negative outlook for ING's ratings is primarily driven by the group's emerging market activities. The rating agency cautioned however, that further acquisition activity will be carefully monitored. Continued growth in financial leverage in association with an ambitious European expansion strategy could have a negative effect on ING's ratings.
Moody's said that the review of BHF's ratings for possible upgrade will focus on the degree to which the German bank will benefit from the closer association with the Dutch financial services group, and on ING's level of strategic commitment to the German bank. Although explicit support is not currently contemplated, BHF is likely to achieve better efficiencies and capabilities through cooperation with its parent in various products and markets. In addition, Moody's will consider the possible effects on BHF's risk profile of closer integration with ING in some of its businesses (such as emerging markets-related transaction), and the potential liquidity benefits of its association with the larger group, given its dependence on institutional funding.
The following ratings were confirmed:
ING Bank N.V. - Senior debt and deposit ratings of Aa2, Subordinated debt ratings of Aa3; bank financial strength rating at B+, ratings of the company for commercial paper at Prime-1.
Internationale Nederlanden (US) Funding Corp. - rating of company for commercial paper of Prime-1.
International Nederlanden Bank N.V., Paris - Senior deposit rating of Aa2, rating of company for short-term deposits of Prime-1.
ING Capital Funding I LLC - preferred rating of "aa3" .
ING Capital Funding Trust I - preferred rating of "aa3".
BHF Bank AG - rating of the company for short-term deposits and commercial paper was confirmed at Prime-1.
BHF Finance (Delaware), Inc. - rating for guaranteed commercial paper confirmed at Prime-1
The following ratings were placed on review for possible upgrade:
BHF Bank AG - Senior debt and deposits of A1, financial strength rating of C+. The rating of the company for short-term deposits and commercial paper was confirmed at Prime-1.
BHF Finance (Netherlands) BV - Guaranteed Senior debt of A1.
ING Group is a diversified financial services provider, headquartered in Amsterdam. The group had total assets of Euro 395 billion as of December 31, 1998, including consolidation of its banking and insurance operations. BHF is a German wholesale-oriented bank, active in middle-market lending, trade & project finance, mortgage banking, investment banking and trading, as well as private banking. It had assets as of year-end 1998 of Euro 46 billion.
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