Fitch Ratings has affirmed Industrial and Commercial Bank of China (Macau) Limited's (ICBC Macau) Long-Term Foreign-Currency Issuer Default Rating (IDR) at 'A'.

The Outlook is Stable.

Fitch has also affirmed the Shareholder Support Rating (SSR) at 'a', Short-Term IDR at 'F1+', the long-term ratings on the bank's senior unsecured debt at 'A' and its subordinated debt at 'BBB+'. The full list of rating actions is listed below

Key Rating Drivers

SSR Drives IDRs: The Long-Term IDR of ICBC Macau is driven by the SSR of 'a'. It reflects Fitch's expectation of a very high probability of support from its parent, Industrial and Commercial Bank of China Limited (ICBC, A/Stable/bbb) and ultimately from the Chinese sovereign (A+/Stable), if needed. The Short-Term IDR of 'F1+' is at the higher of the two options commensurate with the Long-Term IDR of 'A', as we regard the parent's propensity to provide support as more certain in the near term.

Strong Local Presence: ICBC Macau's strong presence in the local market, with a 18% market share of the system assets at end-2022, allows the bank to play an important role in supporting ICBC's development strategies within the Greater Bay Area. We view a default by ICBC Macau would have huge reputational repercussions for ICBC, given the same branding, high level of management and operational integration and the parent's controlling ownership (89.33%).

Highly Integrated with Parent: ICBC Macau is strongly integrated with ICBC in business generation, liquidity and capital management, risk control and through management secondments. ICBC Macau uses a common core banking system with ICBC to enhance the group's operational efficiencies. The subsidiary's management also manages ICBC's Macao branch, which accounts for another 4% of system assets.

Fitch does not assign a Viability Rating to ICBC Macau because the bank's operations and risks are tightly controlled by ICBC and it benefits significantly from the parent's franchise.

ICBC's Key Subsidiary: ICBC Macau's SSR is equalised with the parent's support-driven IDR. It mainly reflects our view that it is a key overseas subsidiary of ICBC that executes the development strategies in Macao, which is a core market for the parent. The bank supports the parent's customers in offshore Chinese yuan-related businesses as well as their business transactions with Portuguese-speaking countries.

Rating Sensitivities

Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade

ICBC Macau's IDRs and SSR will be downgraded if there is a downgrade of ICBC's IDRs or if Fitch's assessment of shareholder support from ICBC, and the Chinese sovereign's ability and propensity to support ICBC and its subsidiary, are significantly weakened. Our view of ICBC's propensity to support ICBC Macau could also be negatively affected if the Macao bank's strategic role in the parent's operations were to weaken significantly, although that is not our base case.

Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade

An upgrade of ICBC's Long-Term IDR could lead to similar positive rating action on ICBC Macau's Long-Term IDR and SSR, provided we believe that there is no change in the parent bank's propensity to support ICBC Macau.

The Short-Term IDR cannot be upgraded as it is at the top of the scale.


Subordinated Debt and Senior Unsecured Debt

ICBC Macau's subordinated debt is rated two notches below its IDR to reflect high loss severity relative to senior unsecured debt, in line with Fitch's criteria. The use of ICBC Macau's support-driven IDR as the anchor rating reflects Fitch's assessment that support from ICBC, and ultimately from the Chinese government, would be made available to the notes, if needed. The support will neutralise the non-performance risk of the notes, as reflected in the anchor rating, and hence no incremental notching is required. The notes do not have triggers that would result in coupon deferral.

The rating on ICBC Macau's certificate of deposit (CD) programme is equalised with the bank's IDRs, as the programme constitutes its direct, unconditional, unsubordinated and unsecured obligations. We believe the default risk of the programme is equal to that of the bank with expected average recoveries upon default.

Ex-Government Support (xgs) Ratings

ICBC Macau's IDRs(xgs) and senior unsecured debt ratings (xgs) are equalised with the ICBC's IDRs (xgs) based on shareholder support.


Subordinated Debt and Senior Unsecured Debt

The ratings for ICBC Macau's CD programme and subordinated notes are sensitive to changes in the bank's Long-Term IDR, from which it is notched.

Ex-Government Support (xgs) Ratings

The Long-Term IDR (xgs) is sensitive to a change in the parent's ability or propensity to provide support, as assessed by Fitch. The Long-Term IDR (xgs) is also sensitive to the parent's Long-Term IDR (xgs) if there is no change in the parent's propensity to provide support. The Short-Term IDR (xgs) would be upgraded to 'F2 (xgs)' should the Long-Term IDR (xgs) be upgraded to 'BBB+ (xgs)' or if the parent's funding and liquidity score reached 'bbb+' while its VR remain unchanged. A downgrade of the Short-Term IDR (xgs) could happen if the Long-Term IDR (xgs) were downgraded to 'BB+ (xgs)' or below.

A change to the IDRs (xgs) would prompt a similar change to the senior debt ratings (xgs).

Best/Worst Case Rating Scenario

International scale credit ratings of Financial Institutions and Covered Bond issuers have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of three notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of four notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are based on historical performance. For more information about the methodology used to determine sector-specific best- and worst-case scenario credit ratings, visit


The principal sources of information used in the analysis are described in the Applicable Criteria.

Public Ratings with Credit Linkage to other ratings

The ratings of ICBC Macau are driven by our view of the likelihood of support from ICBC, and ultimately China sovereign.

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

(C) 2023 Electronic News Publishing, source ENP Newswire