Fitch affirms Banks of China, Shanghai

Fitch Ratings said it affirmed the ratings of Bank of China, including its long-term issuer default rating at A-, short-term issuer default rating at F2, individual rating at D and support rating at 1 with a positive outlook. The agency also affirmed Bank of Shanghai's long-term issuer default rating at BB-, short-term issuer default rating at B, individual rating at D and support rating at 4 with stable outlook.

Bank of China's issuer default rating, one notch below China's sovereign rating, is driven by very high expectations of state support in the event of stress, as highlighted by the bank's support rating, the agency said. The rating also reflects its much improved financial position, following government-funded capital, the introduction of a consortium of foreign investors and an initial public offering in mid-2006.

The ratings of Bank of Shanghai reflect its strong franchise in Shanghai, above-average earnings and relatively good management, Fitch said. However, the agency added that the ratings are constrained by ongoing concerns about asset quality and high geographic, sectoral and borrower concentration.

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