Fitch Ratings - London: Fitch Ratings has assigned National Bank of Kuwait France S.A. (NBK France) a Long-Term Issuer Default Rating (IDR) of 'AA-'. The Outlook is Stable. A full list of rating actions is at the end of this rating action commentary.
KEY RATING DRIVERS
IDRS, SUPPORT RATING (SR)
NBK France's IDRs and SR are based on Fitch's assessment that there is an extremely high probability of support from its parent, National Bank of Kuwait (NBK; AA-/Stable), if required. This reflects NBK's strong ability (as indicated by the bank's ratings) and willingness to provide support to NBK France. In turn, NBK's IDRs are based on potential support from the Kuwaiti authorities.
NBK France's IDRs are equalised with those of NBK given NBK France's key role for NBK as a core subsidiary providing NBK with access to the EU market in the context of Brexit. NBK France is viewed as an important part of NBK's International Banking Unit, with a key role in capturing business flows between NBK's core market in the Middle East and North Africa region, and the EU. Our assessment also considers the high level of integration of NBK France into NBK, the majority direct and indirect ownership by NBK (100%), as well as the common branding.
NBK France, previously a branch of NBK International PLC (NBKI, AA-/Stable), was incorporated as a subsidiary of NBK on 1 January 2019. It took over NBKI's activities in the EU in preparation for Brexit. NBK France is small, representing less than 1% of NBK's consolidated assets at end-1H19.
NBK France's core activities are corporate, real estate, private banking and treasury. The bank provides financing services to Middle East companies doing business in the EU and vice-versa. It also provides real estate loans to institutions and individuals from the Middle East looking to buy in France.
The Stable Outlook on NBK France's Long-Term IDR reflects that on NBK.
Fitch does not assign a Viability Rating to NBK France given its close integration with NBK and Fitch's opinion that the bank's franchise cannot be assessed meaningfully in its own right. NBK France operates through a single branch in Paris.
NBK France's IDRs are sensitive to a change in NBK's IDRs. Fitch does not regard this as likely at present, as indicated by the Stable Outlook on NBK's Long-Term IDR. NBK France's ratings would be downgraded if Fitch views the propensity of NBK and/or the Kuwaiti authorities to support NBK France as diminishing. This would most likely be the result of a reduction in NBK France's strategic role for NBK, NBK ownership or integration.
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