Sat, Nov 15, 2008 - Page 12 News List

Fitch downgrades Jih Sun, Waterland

By Joyce Huang  /  STAFF REPORTER

Fitch Ratings yesterday downgraded its ratings on Jih Sun Financial Holding Co (日盛金) and Waterland Financial Holding Co (國票金), while affirming its negative outlook on both financial service providers.

The downgrading of Jih Sun’s ratings reflects the deterioration of its already weak profitability and a prolonged weakness in the quality of assets at its banking subsidiary Jih Sun International Bank (日盛銀行), which is putting pressure on the capital strength of the parent group despite the bank’s improved asset and earnings quality, Fitch said in a press statement yesterday.

As for the outlook revision on Waterland, Fitch voiced its concern on credit losses arising from its subsidiary International Bills Finance Corp’s (IBF) asset-backed commercial paper (ABCP), of which NT$4.3 billion relate to relatively high-risk synthetic collateralized debt obligations (CDOs).

The economic slowdown could negatively affect IBF and the group’s financial performance in the upcoming year, Fitch said.

Fitch added, however, that even after assuming very hefty losses on the ABCP, IBF and the group’s overall credit profile remains quite comfortable.

Fitch may revise the outlook for IBF and the group if they are able to demonstrate consistent improvement in earnings quality and maintain solid capitalization and liquidity.

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