MOODY'S CONFIRMS THE RATINGS OF GÉNÉRALE DE BANQUE S.A. (Aa3/Prime-1/B) AND ITS SUBSIDIARIES; PLACES UNDER REVIEW FOR POSSIBLE UPGRADE THE A1/C+ RATINGS OF ASLK-CGER BANK N.V.; RATINGS OF FORTIS BANK NEDERLAND N.V. (A1/Prime-1/C+) ALSO CONFIRMED
London, 05-14-98 -- Moody's Investors Service confirmed the ratings of G‚n‚rale de Banque S.A. (Aa3/Prime-1/B) as well as of its affiliate Banque G‚n‚rale du Luxembourg S.A.(Aa3/Prime-1/B) and its guaranteed subsidiaries. In a related action, Moody's placed under review for possible upgrade the A1 long-term deposit and C+ bank financial strength ratings of ALSK-CGER Bank N.V.. Moody's also confirmed the ratings of Fortis Bank Nederland N.V. (A1/Prime-1/C+).
According to Moody's, these rating actions follow the announcement yesterday of a possible link-up between G‚n‚rale de Banque and the Fortis Group to combine their banking activities. Moody's said that it understands that Fortis is likely to launch a public tender offer for G‚n‚rale de Banque upon the conclusion of which G‚n‚rale de Banque would become the parent bank of the two groups' combined banking activities.
Concerning the ratings of G‚n‚rale de Banque and ASLK-CGER, Moody's said that the expected merger between the two banks would give the new G‚n‚rale de Banque impressive market shares in Belgium across all business segments. As a result, G‚n‚rale de Banque's competitive position is reinforced. The combination of G‚n‚rale de Banque's and Fortis's banking activities would also create a banking group with substantial market shares in the Netherlands and Luxembourg. The link-up with Fortis should also afford G‚n‚rale de Banque further opportunities for external growth.
In Belgium, the merger should provide opportunities for both revenue enhancements and economies of scale. Revenue enhancements are expected mainly from cross-selling between the two merging banks, and especially in the field of "bancassurance" where ASLK-CGER is a leader. Economies of scale should come from further rationalisation of the merging banks' domestic retail networks. In this respect however, Moody's noted that social, political and cultural impediments are likely to limit the scope of potential cost savings as well as delay the exteriorisation of cost benefits over time. The financial profile of the expanded G‚n‚rale de Banque should be characterised by adequate profitability, sound asset quality and good capital adequacy.
Moody's said that the integration of the numerous and varied entities which compose G‚n‚rale de Banque on one hand and Fortis's banking operations on the other hand represents a major management challenge going forward at a time when management time is also required in order to keep pace with the rapidly-evolving European banking market on the eve of EMU.
Regarding the ratings of Banque G‚n‚rale du Luxembourg and Fortis Bank Nederland, Moody's commented that both banks' franchise should be enhanced as a result of the tie-up between their respective parent groups. Going forward, Moody's will monitor how these banks are integrated with the other subsidiaries existing in their domestic markets.
The following ratings were confirmed:
G‚n‚rale de Banque – long-term bank deposits at Aa3, short-term bank deposits at Prime-1 and bank financial strength rating at B;
Genfinance Luxembourg - senior debt guaranteed by G‚n‚rale de Banque at Aa3, senior subordinated debt guaranteed by G‚n‚rale de Banque at A1 and commercial paper guaranteed by G‚n‚rale de Banque at Prime-1;
G‚n‚rale de Banque Inc. – commercial paper guaranteed by G‚n‚rale de Banque at Prime-1;
Banque G‚n‚rale du Luxembourg – long-term deposits at Aa3, short-term bank deposits at Prime-1; long-term senior debt at Aa3, senior and junior subordinated debt at A1, commercial paper at Prime-1, bank financial strength rating at B, and counterparty rating at Aa3;
ASLK-CGER Bank – short-term bank deposits at Prime-1;
ASLK-CGER Ifico – commercial paper guaranteed by ASLK-CGER Bank at Prime-1;
Fortis Bank Nederland – long-term bank deposits at A1, short-term bank deposits at Prime-1 and bank financial strength rating at C+.
The following ratings were placed under review for possible upgrade:
ASLK-CGER Bank – long-term bank deposits at A1 and bank financial strength at C+;
ASLK-CGER Ifico – senior debt guaranteed by ASLK-CGER Bank at A1, senior subordinated debt guaranteed by ASLK-CGER Bank at A2 and junior subordinated debt guaranteed by ASLK-CGER Bank at A3;
ASLK-CGER North America Inc. – senior debt guaranteed by ASLK-CGER Bank at A1.
G‚n‚rale de Banque, headquartered in Brussels, Belgium, had consolidated assets of BEF5,911 billion (approx. US$160 billion) at end-December 1997. Also headquartered in Brussels, Belgium, ASLK-CGER Bank had BEF3,039 billion (about US$82 billion) in total assets at end-December 1997. Headquarted in Luxembourg, Banque G‚n‚rale du Luxembourg had consolidated assets of LUF1,102 billion (approx. US$30 billion) at end-December 1996. Headquarted in Utrecht, Netherlands, Fortis Bank Nederland had total assets of NLG188 billion (approx. US$108 billion) at end-December 1996.
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