Fitch Upgrades 8 Indonesian Banks

Fitch Upgrades 8 Indonesian Banks' IDRs on Sovereign Upgrade(1)

Fitch Ratings-Jakarta/Taipei/Singapore-18 December 2011: Fitch Ratings has upgraded the Long-Term Issuer Default Ratings (IDRs) of eight Indonesian banks following the upgrade on Indonesia's sovereign ratings. They are PT Bank Mandiri (Persero) Tbk (Mandiri), PT Bank Central Asia Tbk (BCA), PT Bank Rakyat Indonesia (Persero) Tbk (BRI), PT Bank Negara Indonesia (Persero) Tbk BNI), Lembaga Pembiayaan Export-Import Indonesia (Indoexim), PT Bank OCBC NISP Tbk (OCBC NISP), PT Bank Internasional Indonesia Tbk (BII) and PT Bank CIMBNiaga Tbk (CIMB Niaga). The Outlooks on all these banks' IDRs are Stable. A complete list of rating actions is included at the end of this commentary.

"The concurrent upgrades on the
IDRs and revisions to the Support Rating Floors of the three state-owned, systemically-important banks (Mandiri, BRI and BNI) and Indoexim (a government-owned policy bank) to 'BBB-' from 'BB+' reflect Fitch's view of a higher probability of state support in times of need, owing to the government's improving credit profile and the banks' continued systemic importance to the domestic economy," said Julita Wikana, Director with Fitch's Financial Institutions team.

CIMB Niaga, OCBC NISP, and BII's IDRs, together with their Support Ratings, have also been upgraded to 'BBB' from 'BB+', and are at the same level as Indonesia's Country Ceiling (CC). These rating actions reflect Fitch's expectation of strong support from their foreign parent banks (who are rated higher than the CC), especially now that Indonesia's sovereign ratings are in the investment-grade category, and coupled with the fact that each of the parent group's regional aspirations with the South-East Asia region remains a core part of their strategies. The agency also notes of a modest sovereign risk on the financial profiles of the three foreign-owned Indonesian banks, whose exposure to the Indonesian government (for example, in the form of government securities) has declined over the years, and is lower when compared to the three state-owned local banks.

The upgrade on BCA's IDRs, together with its Viability Rating, stems from its demonstrated track record and stronger credit standing, relative to rated domestic peers, through the economic cycles. The affirmations of the other banks' Viability Ratings reflect their broadly steady credit profiles, even though global uncertainties appear to have intensified and may somewhat moderate domestic economic prospects.

Fitch will separately assess the impact of the sovereign rating upgrade on the banks' National Ratings. In addition, the Rating Watch Negative (RWN) on some of the banks' subordinated debt ratings (those with deferral clauses and assigned National Ratings) reflect heightened downgrade risk associated with the pending completion of Fitch's review of how it rates bank regulatory capital instruments. This review was initiated by the exposure draft entitled 'Rating Bank Regulatory Capital Securities' published on 28 July 2011.

For more information on the Indonesian sovereign upgrades, please refer to "Fitch Upgrades Indonesia to 'BBB-'; Outlook Stable", dated 15 December 2011, a vailable at www.fitchratings.com.

The details of all rating actions are:
Mandiri:
- Long-Term Foreign-Currency (LTFC) IDR upgraded to 'BBB-' from 'BB+'; Outlook Stable;
- Long-Term Local-Currency (LTLC) IDR upgraded to 'BBB-' from 'BB+'; Outlook Stable;
- Short-Term Foreign-Currency (STFC) IDR upgraded to 'F3' from 'B';
- Support Rating Floor revised to 'BBB-' from 'BB+';
- Support Rating upgraded to '2' from '3';- Viability Rating affirmed at 'bb+';
- Individual Rating affirmed at 'C/D'; and- National Long-Term Rating 'AAA(idn)'; Stable Outlook.


BRI:
- LTFC IDR upgraded to 'BBB-' from 'BB+'; Outlook Stable;
- STFC IDR upgraded to 'F3' from 'B';
- Support Rating Floor revised to 'BBB-' from 'BB+';
- Support Rating upgraded to'2' from '3';
- Viability Rating affirmed at 'bb+';
- Individual Rating affirmed at 'C/D';
- National Long-Term Rating 'AAA(idn)'; Stable Outlook; and
- Rupiah subordinated debt Rating 'AA(idn); RWN.

BCA:
- LTFC IDR upgraded to 'BBB-' from 'BB+'; Outlook Stable;
- STFC IDR upgraded to 'F3' from 'B';
- Viability Rating upgraded to 'bbb-' from 'bb+';
- Individual Rating upgraded to 'C' from 'C/D';
- Support Rating affirmed at '3';
- Support Rating Floor revised to 'BB+' from 'BB'; and
- National Long-Term Rating 'AAA(idn)'; Stable Outlook.

BNI:
- LTFC and LTLC IDRs upgraded to 'BBB-' from 'BB+'; Outlook Stable;
- STFC IDR upgraded to 'F3' from 'B';
- Support Rating Floor revised to 'BBB-' from 'BB+';
- Support Rating revised to'2' from '3';
- Viability Rating affirmed at 'bb';
- Individual Rating affirmed at 'C/D'; and
- National Long-Term Rating 'AA+(idn)'; Stable outlook.

Indoexim:
- LTFC IDR upgraded to 'BBB-' from 'BB+'; Outlook Stable;
- Support Rating Floor revised to 'BBB-' from 'BB+'; and
- Support Rating revised to'2' from '3'.

BII:
U.S. screening for visa applicants and prompted greater information-sharing



Fitch Upgrades 8 Indonesian Banks' IDRs on Sovereign Upgrade (2)

CIMB Niaga:
- LTFC IDR upgraded to 'BBB' from 'BB+'; Outlook Stable;
- Support Rating upgraded to '2' from '3';
- Viability Rating affirmed at 'bb'; - Individual Rating affirmed at 'C/D';
- National Long-Term Rating 'AAA(idn)'; Stable Outlook; and
- Rupiah Subordinated Debt Rating 'AA(idn); RWN.


OCBC NISP:
- LTFC and LTLC IDR upgraded to 'BBB' from 'BB+'; Outlook Stable;
- STFC IDR upgraded to 'F3' from 'B';
- Support Rating upgraded to '2' from '3';
- Viability Rating affirmed at 'bb'; - Individual Rating affirmed at 'C/D';
- National Long-Term Rating 'AAA(idn)'; Stable Outlook; and
- Rupiah Subordinated Debt Rating 'AA(idn); RWN.


Contacts:
Primary Analyst
Julita Wikana
Director
+62 21 2902 6405
PT Fitch Ratings IndonesiaLevel 20 Prudential Plaza
Jl. Jend. Sudirman Kav.79
Jakarta, Indonesia 12920


Secondary Analyst
Iwan Wisaksana
Director
+62 21 2902 6406

Committee Chairperson
Jonathan Lee
Senior
Director
+886 2 8175 7601

Media Relations: Shivani Sundralingam, Singapore, Tel: + 65 6796 7215, Email: shivani.sundralingam@fitchratings.com.

Note to editors: Fitch's National ratings provide a relative measure of creditworthiness for rated entities in countries with relatively low international sovereign ratings and where there is demand for such ratings. The best risk within a country is rated 'AAA' and other credits are rated only relative to this risk. National ratings are designed for use mainly by local investors in local markets and are signified by the addition of an identifier for the country concerned, such as 'AAA(idn)' for National ratings in Indonesia. Specific letter grades are not therefore internationally comparable.

Additional information is available at www.fitchratings.com. The ratings above were solicited by, or on behalf of, the issuer, and therefore, Fitch has been compensated for the provision of the ratings.

Applicable criteria, "Global Financial Institutions Rating Criteria", dated 16 August 2011, "Country Ceiling", dated 15 August 2011, and "National Ratings Criteria", dated 19 January 2011, are available at www.fitchratings.com.
Applicable Criteria and Related Research: Global Financial Institutions Rating Criteria Country Ceilings National Ratings Criteria

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(RTI, ROS 19 Dec 2011 11:25 WIB)