QNB FINANS FINANSAL KIRALAMA Fitch Ratings has affirmed three Turkish non-bank financial institutions (NBFIs) at their 'B-' Long-Term Foreign-Currency Issuer Default Ratings (LTFC IDRs).
They are leasing companies - Deniz Finansal Kiralama A.S. and
The Outlooks on all three LTFC IDRs are Stable, mirroring those on the companies' respective parents, Denizbank A.S and
Key Rating Drivers
Support-Driven Ratings: The NBFIs' Long-Term IDRs are equalised with those of their respective parents, reflecting Fitch's view that they are core and highly integrated subsidiaries.
Fitch is not able to assess the subsidiaries' intrinsic strength as all three companies are highly integrated within their respective parents and their franchises rely heavily on their parents. The ratings are underpinned by potential shareholder support, but capped at 'B-' by their respective parents' LTFC IDRs, underlining intervention risk from the Turkish government.
Highly Integrated Subsidiaries: The ratings of the NBFI subsidiaries reflect their close integration within and ultimate full or majority ownership by their respective parent banks, as well as the reputational risk of default for their broader groups. The subsidiaries offer leasing and factoring services in the domestic Turkish market.
High Support Propensity: Cost of support for the relevant parent banks would be limited as the subsidiaries are small with total assets at no more than 3% of group assets. This, together with other support factors listed above, means Fitch believes the parents' propensity to support remains very high. However, the ability to support is limited by the respective parents' creditworthiness, as reflected in their ratings.
National Ratings Stable: All three companies' National Ratings and their Outlooks are equalised with their respective parents'. Their affirmation of the National Ratings reflects our view that their creditworthiness in local currency relative to other Turkish issuers' remains unchanged.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade
The subsidiaries' Long-Term IDRs are sensitive to a downgrade of their parents' Long-Term IDRs or a deterioration in the operating environment, which for example could be triggered by a sovereign downgrade.
A downgrade in the parents' National Ratings would also be likely mirrored in the subsidiaries' ratings.
The ratings could be notched down from their respective parents' on material deterioration in the parents' propensity or ability to support or if the subsidiaries become materially larger relative to the respective banks' ability to provide support.
The ratings could also be notched down from their respective parents' if the subsidiaries' strategic importance is materially reduced through, for example, a substantial reduction in business referrals, reduced operational and management integration or ownership, or a prolonged period of under-performance.
Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade
An upgrade of the respective parent's ratings and/or an Outlook revision to Positive would be reflected in the subsidiaries' ratings and Outlooks.
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
All three companies' ratings are linked the ratings of their respective parents.
ESG Considerations
All three companies have an ESG Relevance Score of '4' for Management Strategy, mirroring those of the parents and reflecting increased regulatory intervention in the Turkish banking sector. The latter hinders the operational execution of management strategy, constrains management ability to determine strategy and price risk, and creates an additional operational burden for the banks. This has a negative impact on the companies' credit profiles and is relevant to their ratings in conjunction with other factors.
Unless otherwise stated, the highest level of ESG credit relevance, if present, is a score of '3'. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or to 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 of the materiality and relevance of ESG factors in the rating decision. For more information on Fitch's ESG Relevance Scores, visit www.fitchratings.com/esg
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