RCI Banque

Strong and recurring risk-adjusted profitability. A regulated bank insulated from its corporate parent. Strong capitalization. Predominantly wholesale funded. Business concentration in car financing. Dependence on parent's franchise and product cycles. The negative outlook on RCI and DIAC reflects the negative outlook on Renault, and RCI's position as a core subsidiary of the car maker. RCI has demonstrated its resilience and strong profitability in the past decade, despite the cyclical auto sector, but uncertainty surrounding the group's strategy and governance, including the future of the alliance, could have some contagion effect on RCI. However, we still think RCI can be rated above its parent, and that if we downgraded Renault we would not automatically downgrade RCI. We could lower our ratings

...Dependence on parent's franchise and product cycles. Outlook: Negative The negative outlook on RCI and DIAC reflects the negative outlook on Renault, and RCI's position as a core subsidiary of the car maker. RCI has demonstrated its resilience and strong profitability in the past decade, despite the cyclical auto sector, but uncertainty surrounding the group's strategy and governance, including the future of the alliance, could have some contagion effect on RCI. However, we still think RCI can be rated above its parent, and that if we downgraded Renault we would not automatically downgrade RCI. We could lower our ratings on RCI and DIAC in the next 12-24 months if, following a downgrade of Renault, we believed RCI's creditworthiness failed to be higher than that of its parent. This could be the case if tensions within the alliance negatively affected the effectiveness of RCI's operations, notably regarding funding costs and its strategic focus. We could revise the outlook to stable in the...

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