Scope has affirmed its ratings on Banque Fédérative du Crédit Mutuel SA (BFCM) with a Stable Outlook (issuer rating A+), and simultaneously assigns a new senior unsecured non-preferred debt rating of A. According to the agency, the sustained efforts of Credit Mutuel Arkéa (CMA, not rated) – to leave the Crédit Mutuel Group (CMG) – which is one of France’s three large mutualist banking groups -- may well result in the end in in a split. Nevertheless, should this occur, Scope believes that the remainder of CMG – in which BFCM is the lead entity – would continue as a strong, retail-based banking group with a wide footprint in France and a selective presence elsewhere in Europe.

Scope referred to the relatively recent announcement by CMA that the boards of two of the three regional bank federations making up CMA have voted to initiate action designed to separate them from the rest of the CMG. The relatively intense level of disagreement between the managements of CMA and BFCM/CMG – against the backdrop of decades-long disagreements – should have, in the rating agency’s view, a separation as the most plausible outcome.

Nevertheless, citing a reassuring business model and solid financial and prudential fundamentals related to CMG, as well as the group’s proven track record of a well-calibrated and forward-looking strategy, Scope expressed its belief that the group’s fundamentals and outlook will continue to characterise it as a high single-A credit.

Affirmed were BFCM’s following ratings – all with Stable Outlook:

Issuer Rating A+
Preferred senior unsecured debt ratings A+
Tier 2 securities BBB+
Short-term ratings S-1+

Assigned was the following new rating for BFCM, with Stable Outlook:

Non-preferred senior unsecured debt A

Stress testing & cash flow analysis
No stress testing was performed. No cash flow analysis was performed.

Methodology
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The rating outlook indicates the most likely direction of the rating if the rating were to change within the next 12 to 18 months.

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The rating was not requested by the rated entity or its agents. The rated entity and/or its agents did not participate in the rating process. Scope had no access to accounts, management and/or other relevant internal documents for the rated entity or related third party.
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Regulatory disclosures
This credit ratings and/or rating outlook is issued by Scope Ratings GmbH.
Lead analyst Jennifer Ray, Executive Director
Person responsible for approval of the ratings: Sam Theodore, Group Managing Director
The Issuer Rating/outlooks were first released by Scope on 02.04.2014. The ratings/outlooks were last updated on 21.12.2016. The oreferred senior unsecured debt ratings/outlooks were first released by Scope on 02.04.2014. The ratings/outlooks were last updated on 21.12.2016. The short-term ratings/outlooks were first released by Scope on 22.05.2015. The ratings/outlooks were last updated on 26.10.2017. The Non-preferred senior unsecured debt ratings/outlooks were first released 06.02.2018. The Tier 2 security ratings/outlooks were first released by Scope on 19.12.2016. The ratings/outlooks were last updated on 19.12.2016.

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