Fitch Withdraws WGZ BANK's Ratings on Merger With DZ BANK
DZ BANK acquired WGZ BANK in accordance with the merger agreement signed on 12 April 2016 based on an exchange ratio of 67.6 DZ BANK shares for one WGZ BANK share valuing the combined entity at EUR17.6bn. The enlarged DZ BANK is now the sole central institution of Genossenschaftliche FinanzGruppe (GFG, the German cooperative banking group, AA-/Stable/F1+) and intends to complete WGZ BANK's integration by end-2018.
WGZ BANK was a member of GFG's mutual support scheme, as is its legal successor DZ BANK. Therefore, WGZ's creditors continue to benefit from the mutual support scheme's comprehensive coverage. Fitch does not rate WGZ BANK's outstanding notes. The merger between DZ BANK and WGZ BANK was also why DZ BANK was excluded from the European Banking Authority's 2016 EU-wide stress test.
The IDRs of all 1,029 member banks of GFG's mutual support scheme are aligned with GFG's IDRs, in line with Fitch's approach to rating mutual banking groups backed by mutual support mechanisms. Beside the enlarged DZ BANK, members are predominantly small local Volksbanken and Raiffeisenbanken based and operating in Germany and DZ BANK's major banking subsidiaries, which are product suppliers to local banks.
KEY RATING DRIVERS
The ratings were withdrawn because WGZ BANK ceased to exist as a legal entity on
31 July 2016. As a result, Fitch will no longer provide ratings or analytical coverage for this issuer. GFG's and DZ BANK's ratings are unaffected by the merger. We do not assign Viability Ratings to GFG's members.
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