BANK OF CHINA LIMITED
Fitch Ratings has revised the Outlook on
The Long-Term Issuer Default Rating (IDR) has been affirmed at 'A-', the Short-Term IDR at 'F1' and the Shareholder Support Rating (SSR) at 'a-'.
The Outlook revision mirrors the same rating action on
BOCAL's xgs ratings were not part of this review.
Key Rating Drivers
Shareholder Support Drives Ratings: BOCAL's IDRs and SSR reflect a very high likelihood of support from its parent, BOC (A/Negative/bbb). BOC's Long-Term IDR is used as the anchor rating to reflect Fitch's view that support will most likely flow from the Chinese government through the parent and to BOCAL, if required.
Fitch believes BOCAL has strong synergies with and is strategically important to the parent, but its small size means it is not an integral part of the group. We have reflected this by notching the SSR and Long-Term IDR of BOCAL one level below the parent's rating.
Short-Term Support More Likely: The 'F1' Short-Term IDR is also support-driven and is at the higher of the two options for 'A-' Long-Term IDRs outlined in Fitch's Bank Rating Criteria. This reflects Fitch's view that BOC's propensity to support would be more certain in the short term.
Viability Rating Not Assigned: We have not assigned a Viability Rating (VR) to BOCAL as it maintains a high level of integration with its parent through management, strategy, treasury and risk functions. BOCAL also relies heavily on the parent's brand name to attract business. These factors combined mean that a standalone credit assessment for the subsidiary is not meaningful.
Strategically Important to Parent: Fitch believes BOCAL has strong synergies and is strategically important to the parent, but its small size means it is not an integral part of the group. Total assets accounted for about 0.1% of the parent's as of
Rating Sensitivities
Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade
BOCAL's Long-Term IDR and SSR are sensitive to changes in BOC's Long-Term IDR. Any downgrade of the parent's Long-Term IDR is most likely to be reflected in BOCAL's Long-Term IDR. BOCAL's IDRs could also be downgraded if Fitch believes the subsidiary's importance to the parent has decreased or there are other changes to the parent's ability or propensity to provide support.
BOCAL's Short-Term IDR may be downgraded if the parent's Long-Term IDR is downgraded
Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade
We are likely to revise the Outlook on BOCAL's Long-Term IDRs to Stable if the rating Outlook for BOC is revised to Stable.
BOCAL's Long-Term IDR could be upgraded if Fitch believes the parent has an increased propensity to support the subsidiary. This could include, BOCAL becoming an integral part of the wider group. In addition, BOCAL's Long-Term IDR is likely to be upgraded if the parent's Long-Term IDR is upgraded.
BOCAL's Short-Term IDR of 'F1' may be upgraded if BOCAL's Long-Term IDR is upgraded and the parent's Short-Term IDR remains at 'F1+'.
OTHER DEBT AND ISSUER RATINGS: KEY RATING DRIVERS
Parent Guarantee: The ratings on BOCAL's guaranteed AUD1.5 billion transferable certificate of deposit (TCD) programme and debt issued under the programme reflect a guarantee from the parent, BOC, that is included in BOCAL's programme documents. We expect the guarantee to remain in place and therefore equalise the programme ratings with BOC's IDRs.
OTHER DEBT AND ISSUER RATINGS: RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade:
BOCAL's TCD programme ratings are likely to be downgraded to the same level as BOCAL's IDRs if the guarantee is removed from the programme. BOCAL's TCD programme and guaranteed debt ratings will also be downgraded if the Long-Term IDR of the parent is downgraded.
Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade:
The long-term rating assigned to the TCD programme and the guaranteed debt ratings could be upgraded if the parent's Long-Term IDR is upgraded. The short-term rating assigned to the TCD programme cannot be upgraded, as it is already at the highest level on Fitch's rating scale.
Sources of Information
The principal sources of information used in the analysis are described in the Applicable Criteria.
REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING
The principal sources of information used in the analysis are described in the Applicable Criteria.
Public Ratings with Credit Linkage to other ratings
BOCAL's ratings are support-driven and therefore linked directly with those of its parent, BOC.
ESG Considerations
The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. For more information on Fitch's ESG Relevance Scores, visit www.fitchratings.com/topics/esg/products#esg-relevance-scores.
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