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The Long-Term IDR and senior debt ratings of KBC Bank have been upgraded to one notch above the bank's VR as its QJD buffer is sufficient and sustainable to protect senior obligations from default in case of failure, either under a resolution process or as part of a private-sector solution (ie, distressed debt exchange) to avoid a resolution action.
Fitch's view of the regulatory intervention point and post-resolution capital needs taken together suggest a QJD and holding company senior debt buffer of around 8% of RWAs could be required to restore viability without hitting senior creditors at the BOI level.
At end-3Q18, AIB's QJD and holding company senior debt buffer was EUR3 billion, or 5.6% of RWA.
We maintain the uplift on SCB's IDR above its Viability Rating because we expect the QJD buffer to be complemented by senior holding-company debt, which will be downstreamed in a subordinated manner to SCB to comply with total loss absorbing capital (TLAC) and minimum requirement for eligible liabilities (MREL) requirements from 2019.
SCB's Long-Term IDR and senior debt ratings are also sensitive to a shrinking QJD buffer relative to RWAs or our assumptions around its long-term sustainability.
In the event that the acquisition does not proceed Fitch would likely upgrade VM's Long-Term IDR to one notch above the VR due to the strength of the bank's QJD buffer.
On this basis, Fitch calculates that the buffer of QJD and senior non-preferred debt was over 11% of risk-weighted assets at end-June 2018.
The buffer of QJD and senior non-preferred debt was over 9% of risk-weighted assets (RWA) at end-March 2018, when also taking into account the EUR500 million senior non-preferred issue executed in early July 2018.
Banco Santander has a clear multiple point of entry (MPE) resolution strategy so Fitch considers recapitalisation needs and available qualifying junior debt (QJD) and senior non-preferred debt buffers at the parent bank's resolution perimeter on a basis that deconsolidates the material subsidiaries that will be subject to resolution actions.
As BBVA has a clear multiple point of entry (MPE) resolution strategy Fitch therefore considers recapitalisation needs and the available qualifying junior debt (QJD) and senior non-preferred debt buffers of the parent bank on a basis that deconsolidates the material subsidiaries that will be subject to separate resolution actions.
Fitch has equalised the IDR with BB plc's IDR rather than the parent's VR because the parent will fund BBI with sufficient and sustainable internal debt subordinated to external senior creditors and with qualifying junior debt (QJD).
Fitch has equalised the Long-Term IDR with UBS AG's Long-Term IDR rather than its VR because the parent will fund UBS ESE with sufficient and sustainable internal debt subordinated to external senior creditors and qualifying junior debt (QJD).
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