Fitch Rates Bendigo and Adelaide Bank's Basel III Sub-Debt 'BBB+'

(The following statement was released by the rating agency)

SYDNEY, January 23 (Fitch) Fitch Ratings has assigned a rating of ‘BBB+’ on 
Bendigo and Adelaide Bank Limited’s (BEN) Basel-III compliant Tier 2 instrument, 
which will be issued on 29 January 2014. 

The direct, unsecured and subordinated obligations will be denominated in 
Australian dollars and will be issued under BEN's AUD5bn Debt Instrument 
Programme. BEN’s issue will be AUD300m in size, replacing a small amount of 
legacy Lower Tier 2 subordinated debt, which matured in 2013. The notes can be 
called after five years subject to regulatory approval by the Australian 
Prudential Regulatory Authority (APRA). Final maturity is 29 January 2024.

The notes include a non-viability clause and will qualify as Tier 2 capital for 
the bank in accordance with APRA’s written requirement. 

KEY RATING DRIVERS & RATING SENSITIVITIES

BEN’s Tier 2 instrument is classified as subordinated debt and is rated one 
notch below its Viability Rating (VR) of ‘a-’ to reflect its below-average 
recovery prospects relative to senior unsecured instruments. The notes will 
convert to equity in part or full should APRA consider this step necessary to 
maintain the bank's viability (that is, at the point of non-viability). If this 
is not possible, the notes would be written down in full or in part.

The notes have been notched from the bank's VR. The agency believes no 
additional notching from the VR for non-performance is required to capture the 
point of non-viability as it is broadly the same as that expressed in the VR.

BEN's total regulatory capital ratio was 10.71% at end-June 2013. The new issue 
is likely to increase the capital ratio by 98 basis points based on its June 
2013 capital position. 

Under Fitch's methodology, the instrument does not qualify for any equity 
credit.

BEN’s subordinated debt ratings are broadly sensitive to the same considerations 
that might affect BEN’s VR (see Rating Action Commentary dated 28 November 
2013). 

Bendigo and Adelaide Bank’s ratings are as follows:

Long-Term Issuer Default Rating (IDR): 'A-'; Outlook Stable;

Short-Term IDR: 'F2';

Viability Rating: 'a-'; 

Support Rating: '3';

Support Rating Floor: 'BB';

Commercial Paper: ‘F2’;

Long-Term senior unsecured debt: ‘A-’;

Short-Term senior unsecured debt: ‘F2’; and

Lower Tier 2 debt assigned: ‘BBB+’.

Contact: 

Primary Analyst 

Andrea Jaehne

Director

+61 2 8256 0343

Fitch Australia Pty. Ltd., Level 15, 77 King Street, Sydney NSW 2000

Tim Roche

Senior Director

+61 2 8256 0310

Committee Chairperson

Mark Young

Managing Director

+65 6796 7229

Media Relations: Iselle Gonzalez, Sydney, Tel: +61 2 8256 0326, Email: 
iselle.gonzalez@fitchratings.com.

Additional information is available on www.fitchratings.com

Applicable criteria, “Global Financial Institutions Rating Criteria”, dated 15 
August 2012 and “Assessing and Rating Bank Subordinated and Hybrid Securities”, 
dated 5 December 2012 are available at www.fitchratings.com.

Applicable Criteria and Related Research: 

Global Financial Institutions Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=686181

Assessing and Rating Bank Subordinated and Hybrid Securities

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=695542

Additional Disclosure 

Solicitation Status 

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=816490

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