Fitch assigns ANZ Vietnam first-time 'BB' rating; positive outlook
Fitch assigns ANZ Vietnam first-time 'BB' rating; positive outlook
Fitch Ratings has assigned a first-time long-term foreign-currency issuer default rating (IDR) of 'BB' and long-term local-currency IDR of 'BBB' to ANZ Bank Vietnam Limited (ANZV). 
Under the rating action released on Monday, the bank’s outlook was positive, reflecting Fitch’s outlook on the Viet Nam sovereign (BB/Positive).
Fitch believes that the bank's parent Australia and New Zealand Banking Group Limited (ANZ) has a strong ability to extend extraordinary support to its Viet Nam subsidiary - given the parent's credit profile, and ANZV's small asset base that accounted for only around 0.2 per cent of the parent's total assets at end-2018.
Nevertheless, the rating agency noted, Fitch believes that currency transfer and convertibility risks, as reflected in Viet Nam's country ceiling of 'BB', could represent a significant constraint on ANZV's ability to receive support from its Australia-based parent. This is reflected in the support rating of '3' that indicates a moderate probability of support from its higher-rated Australia-based parent, in times of need. ANZV's long-term foreign currency IDR is capped at the Vietnamese country ceiling.
Fitch regards the risk of sovereign restrictions on local-currency repayments as lower than that of foreign-currency restrictions.
“We also expect parental support to be robust, assuming no very high levels of sovereign or macroeconomic stress. Hence, ANZV's long-term local-currency IDR is rated two notches above Viet Nam's sovereign rating,” Fitch said.
Fitch’s view on ANZ's propensity to provide support to ANZV is based on ANZV's relatively limited role in the group, compared with larger subsidiaries in more strategically important markets.
According to Fitch, it has not assigned a viability rating to ANZV due to its high level of management and operational linkages with its parent and the absence of a meaningful standalone franchise. ANZV has a small asset base, constituting a mere 0.3 per cent of Vietnam banking system assets at end-2018.
