RCI Banque

Strong and recurring risk-adjusted profitability, despite weak auto cycle. 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 indicates that we could lower the ratings on RCI in 2020-2021 if we take a similar action on Renault. This is because we maintain our view that RCI cannot be rated more than two notches above its parent. It also reflects the possibility that industry risks could increase for the French banking sector in the wake of the COVID-19 pandemic. We could also lower the ratings if the bank's earnings capacity stopped outperforming similarly rated peers. This could be due to intensifying pressures

...Outlook: Negative The negative outlook indicates that we could lower the ratings on RCI in 2020-2021 if we take a similar action on Renault. This is because we maintain our view that RCI cannot be rated more than two notches above its parent. It also reflects the possibility that industry risks could increase for the French banking sector in the wake of the COVID-19 pandemic. We could also lower the ratings if the bank's earnings capacity stopped outperforming similarly rated peers. This could be due to intensifying pressures on the auto market resulting from the COVID-19 pandemic and containment measures, or rising funding costs and difficult access to capital markets as a result of contagion risk from Renault....

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