MONTERREY, Mexico & NEW YORK--(BUSINESS WIRE)--Fitch Ratings has affirmed ING Bank (Mexico)'s (INGMex) long-term Issuer Default Ratings (IDRs) at 'BBB+/F2', as well as its national scale ratings at 'AAA(mex)' and 'F1+(mex)'. INGMex's IDRs reflect the implicit support from its parent company, ING Bank NV, rated 'A+/1+' with a Stable Outlook by Fitch. See the full list of rating actions at the end of this commentary.
INGMex long-term IDR is currently set at the same level as Mexico's sovereign local currency rating. It could be negatively affected in case of weak ability and/or willingness of support from ING Bank NV. In Fitch's opinion, there is a high probability that support from ING Bank NV is forthcoming, if needed, despite the challenges that most global trading banks are facing at present. However, Fitch considers that a decline in business volumes is likely in view of the parent company's efforts to meet the more stringent capital requirements by mid-2012. A potential downgrade of the bank's IDR to a level that is below Mexico's sovereign ratings would result in a national-scale long-term rating lower than its current 'AAA(mex)' level.
Core earnings remain exposed to volatility in trading revenue, since INGMex is very active in foreign exchange and interest rate derivatives. The bank's wholesale nature results in a small number of lending activities on its balance sheet (less than 3% of total assets as of third quarter 2011 [3Q'11]). In turn, the absence provisions and well-contained operating cost partially mitigate market revenue volatility. Securities lending operations are recurring. Debt instruments are mostly composed of government issues (94.3% of total securities as of 3Q'11).
INGMex does not have impaired loans. Fitch considers that market risk levels at INGMex are reasonable and well monitored. Funding is mostly short-term and wholesale. However, Fitch considers that INGMex's liquidity risk is modest in view of its large amount of highly rated marketable securities. Bond lending transactions show a well-matched funding structure. In Fitch's opinion, INGMex is adequately capitalized. Backed in the past by capital infusions, earnings retention acts now as its main source for capital growth. Fitch also believes that pressures on capital by credit and market risk are low, especially as the bank could likely reduce its trading activities in the foreseeable future.
INGMex is a Mexican specialized bank focused on trading activities and corporate finance services. It started operations in Mexico during 1995 and has since been an indirect subsidiary of ING Bank NV.
The following ratings actions were taken:
INGMex:
--Long-term IDR affirmed at 'BBB+';
--Short-term IDR affirmed at 'F2';
--Long-term local currency IDR affirmed at 'BBB+';
--Short-term local currency IDR affirmed at 'F2';
--Individual rating affirmed at 'C/D';
--Support Rating affirmed at '2';
--National-scale long-term rating affirmed at 'AAA(mex)';
--National-scale short-term rating affirmed at 'F1+(mex)';
--National-scale long-term rating of senior unsecured debt at 'AAA(mex)';
The Rating Outlook for long-term ratings is Stable.
Additional information is available at 'www.fitchratings.com'. The ratings above were solicited by, or on behalf of, the issuer, and therefore, Fitch has been compensated for the provision of the ratings.
Applicable Criteria and Related Research:
--'Global Financial Institutions Rating Criteria', Aug. 16, 2011.
--'National Ratings Criteria', Jan. 19, 2011.
Applicable Criteria and Related Research:
National Ratings Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=595885
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