Fitch Affirms J.P. Morgan SE at 'AA'/'F1+' After Merger with other EU-Based Entities.
ENPNewswire-January 28, 2022--Fitch Affirms J.P. Morgan SE at 'AA'/'F1+' After Merger with other EU-Based Entities
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Release date- 27012022 - Fitch Ratings has affirmed J.P. Morgan SE's (JPMSE; formerly known as J.P. Morgan AG [JPMAG]) Long-Term (LT) and Short-Term (ST) Issuer Default Ratings (IDRs) at 'AA'/'F1+', respectively, following the finalization of the merger of two other EU-based entities.
The Outlook for JPMSE's LT IDR remains Stable.
In order to simplify its multi-entity structure in the EU and make it more scalable, JPM consolidated its existing EU banking entities into a single banking entity, J.P. Morgan Bank Luxembourg S.A. (JPMBL) and J.P. Morgan Bank Ireland plc have been merged into JPMAG effective Jan. 22, 2022. Subsequently, JPMAG changed its charter and legal name to JPMSE and now will be supported by a number of European Economic Area-passported branches as well as a third country branch in the U.K.
As such, Fitch has affirmed and withdrawn JPMBL's LT and ST IDRs given that the entity no longer exists.
Fitch has also withdrawn JPMBL's and JPMSE's Support Ratings (SR) of '1' as they are no longer considered relevant to the agency's coverage after published its revised Bank Rating Criteria in November 2021. At the same time, in accordance with the revised Bank Rating Criteria, Fitch has assigned a shareholder SR (SSR) of 'aa' to JPMSE.
Key Rating Drivers
IDRs, SSR and Deposit Rating
JPMSE's LT IDR is driven by Fitch's view of the company's support from its direct parent reflecting Fitch's view that the parent has a very high propensity and ability to provide extraordinary support to JPMSE, if needed.
JPMSE is a wholly-owned subsidiary of JPMorgan Chase Bank, N.A. (JPMCBNA; AA/F1+), which is a wholly-owned subsidiary of JPMorgan Chase & Co. (JPM). The IDRs are equalized with JPMCBNA as we believe the entity is a core operating subsidiary as it clears all high-value EUR payments for JPM entities and branches worldwide and acts as the firm's access point to the Euro system, via the Bundesbank.
Today's affirmation incorporates Fitch's view that after this reorganization JPMSE will remain designated as a Material Entity (ME) for U.S. regulatory purposes, including the preparation of the firm's Title 1 resolution plans which further supports equalization with JPMCBNA.
JPMSE's ST deposit rating remains equalized with its ST IDR in accordance with Fitch's Bank Rating Criteria.
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