Fitch Ratings has affirmed Germany-based Standard Chartered Bank AG's (SCB AG) Long-Term Issuer Default Rating (IDR) at 'A+' with a Negative Outlook.
A full list of rating actions is below.
KEY RATING DRIVERS
The IDRs and Support Rating of SCB AG reflect Fitch's view of an extremely high probability that its parent Standard Chartered Bank (SCB; A+/Negative/a) will support the 100%-owned German subsidiary if required. This is based on its role in the group, strong integration with the parent and the broader group, strong reputational incentives, and a strong ability to support, if needed.
SCB AG is highly integrated with SCB in client relationships, management, operations and balance sheet, which underpins our view of a strong propensity to support. SCB AG's incorporation is aimed at ensuring that the UK-headquartered Standard Chartered group can maintain and expand relationships with European Economic Area corporate and institutional clients irrespective of the terms of Brexit. These clients are important revenue contributors, and of strategic importance to the group's network and trade-focused business model.
SCB AG's ratings are equalised with SCB's Long-Term IDR. We believe that the German subsidiary's senior creditors would benefit from the group's large buffer of junior debt and bail-in senior debt in a group resolution. This view takes into account that SCB AG is highly integrated with the parent in balance sheet and business model, and the EU resolution regime is similar to the UK's, which leads us to believe that authorities would co-operate in a resolution.
We do not assign a Viability Rating to SCB AG as its franchise, strategy and operations are closely intertwined with those of SCB and the subsidiary is not intended to have a meaningful standalone franchise that could exist without ownership of the parent.
The Derivative Counterparty Rating (DCR) is equalised with the Long-Term IDR because we do not expect any incremental probability-of-default benefit to derivative counterparties over and above the strong support benefit already factored into its IDR.
The Negative Outlook on SCB AG's Long-Term IDR is in line with that on SCB's IDR, which mainly reflects risks from the fallout of the coronavirus pandemic on its financial standing and ability to implement its strategic objectives.
SCB AG's Short-Term IDR is at the same level as SCB's.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to negative rating action/downgrade:
A downgrade of SCB AG's Long- and Short-term IDRs, Support Rating and DCR could arise from a negative rating action on SCB's IDRs. SCB's IDRs are mainly sensitive to the fallout of the coronavirus pandemic or an increase in risk appetite to counter medium-term profitability pressures. A downgrade could also be triggered if Fitch believes that the group's propensity to support SCB AG has diminished because of strategic considerations.
SCB AG's Long Term IDR could be downgraded if we no longer believe that senior creditors would benefit from protection from the group's bail-in debt buffer in resolution. In this scenario we would anchor SCB AG's IDR to SCB's VR, which is one notch lower than the IDR.
Factors that could, individually or collectively, lead to positive rating action/upgrade:
Any positive rating action/upgrade on SCB's IDRs would trigger an equivalent rating action on SCB AG's IDRs and DCR. The Support Rating is already at the highest level and therefore cannot be upgraded.
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 [https://www.fitchratings.com/site/re/10111579]
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
SCB AG's ratings are linked to SCB's Long-Term IDR.
RATING ACTIONS
ENTITY/DEBT RATING PRIOR
Standard Chartered Bank AG LT IDR A+ Affirmed A+
ST IDR F1 Affirmed F1
Support 1 Affirmed 1
DCR A+(dcr) Affirmed A+(dcr)
VIEW ADDITIONAL RATING DETAILS
Additional information is available on www.fitchratings.com
STANDARD CHARTERED PLC 
