Current Report no. 20 (2011)

Fitch affirms poland's Bank Zachodni WBK at 'a+'; Outlook stable

Fitch Ratings-London/Warsaw-16 June 2011: Fitch Ratings has affirmed Poland-based Bank Zachodni WBK S.A.'s (BZ WBK) ratings, including its Long-term Issuer Default Rating (IDR) at 'A+' with Stable Outlook. A full list of rating actions is at the end of this release.

BZ WBK's Long- and Short-term IDRs are based on the extremely high potential support that it can expect to receive from its majority shareholder, Banco Santander SA (Santander; 'AA'/Stable/'F1+').

In Fitch's view, following the acquisition of BZ WBK, Santander's banking operations in Poland have gained a critical mass and become strategically important. The ratings also reflect the early stage of integration of BZ WBK into Santander, and potential Polish country risks, given the sovereign's foreign currency Long-term IDR of 'A-'/Stable.

The Individual Rating reflects the strength of BZ WBK's franchise, as evidenced by its resilience to the deterioration in the operating environment during the financial crisis. It also reflects BZ WBK's adequate capitalisation and internal capital generation, prudent risk management and better-than-market-average asset quality. Downside risk related to its significant exposure to the vulnerable commercial property segment appears limited, given signs of recovery of the property market in Poland.

BZ WBK is Poland's fifth-largest bank, with around 4.5% of sector assets at end-2010. It is 95.57%-owned by Santander. Core activities are retail and corporate banking, supported by leasing, asset management, and brokerage subsidiaries; stakes in Polish insurance companies controlled by Aviva, including two joint ventures; and a 10% participation in Poland's largest pension fund.