ICBC Panama branch ratings upgraded after Fitch lifts ex-government support assessment

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ICBC Panama ratings upgraded

Highlights

Fitch upgrades ICBC Panama Branch's long-term ex-government support rating to 'BBB+(xgs)' from 'BBB(xgs)' and short-term to 'F2(xgs)' from 'F3(xgs)'.
The upgrades reflect ICBC's strong business profile, dominant franchise, very strong funding position, and an improved operating environment for Chinese banks.
Fitch equalizes ICBC Panama's ratings with its head office, noting no expectation of Panama's country risks causing restrictions that impact the branch's obligations.

Branch ratings align with head office

As reported by Fitch Ratings, Industrial and Commercial Bank of China Limited, Panama Branch's long-term and short-term ex-government support ratings are upgraded to 'BBB+(xgs)' from 'BBB(xgs)' and to 'F2(xgs)' from 'F3(xgs)'. The move follows the upgrade of parent Industrial and Commercial Bank of China Limited's long-term and short-term issuer default ratings on an ex-government support basis to the same levels.

Fitch says ICBC's long-term IDR on an xgs basis is driven by its Viability Rating, which is upgraded on the back of the bank's strong business profile, dominant franchise, very strong funding position and continued improvement in the operating environment for Chinese banks. The short-term IDR on an xgs basis maps from the long-term rating.

Fitch takes no rating action on ICBC Panama's other ratings.

Latin America role and rating triggers

Fitch says ICBC Panama's ratings are equalized with those of its head office because the branch is fully integrated into the same legal entity. The agency adds that it does not expect Panama's country risks to create transfer and convertibility restrictions that would weaken the branch's ability to meet its obligations.

The branch supports ICBC's strategy to expand its presence in Latin America through a corporate-focused lending portfolio in selected regional markets. Fitch says the unit's sound asset quality reflects exposure to low-risk corporate clients, while strong capitalization, funding and liquidity, supported by ICBC, underpin its credit profile.

Fitch says a downgrade of ICBC's xgs issuer default ratings would lead to lower xgs ratings for the Panama branch, while a further upgrade at the head office would support positive rating action for the branch.

In our earlier report on Fitch’s rating of China Hainan Rubber’s proposed subordinated perpetual sustainable securities, we explained why the notes were positioned below the issuer rating due to their subordinated ranking and coupon-deferral features. We also outlined Fitch’s view of the group’s leverage and liquidity profile, and how state-linked support and funding access underpin its overall credit assessment.

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