Fitch Ratings has placed Hauck Aufhaeuser Lampe Privatbank AG's (HAL) 'BBB+' Long-Term Issuer Default Rating (IDR) and 'F2' Short-Term IDR on Rating Watch Positive (RWP).

A full list of rating actions is below.

These actions follow the announcement that ABN AMRO Bank N.V. (ABN AMRO; A/Stable) has entered into an agreement to acquire HAL. The RWP reflects Fitch's view that the acquisition by ABN AMRO will result in HAL benefiting from a high likelihood of support from its new, higher-rated owner. Fitch will reflect this likelihood of support by assigning a Shareholder Support Rating (SSR) to HAL once the transaction is completed.

The completion of the acquisition is expected in 1Q25 once regulatory approval has been obtained. Fitch expects to resolve the Rating Watch upon closing of the transaction. The resolution of the RWP could take longer than six months, which is more than Fitch's normal Rating Watch resolution horizon.

We do not expect the acquisition to have an immediate significant impact on HAL's standalone credit profile. Therefore, its Viability Rating (VR) and Government Support Rating (GSR) are unaffected by this rating action.

Key Rating Drivers

Shareholder Support Likely: We expect to assign HAL an SSR once the acquisition is completed to reflect our view of potential shareholder support from ABN AMRO, in case of need. This reflects our view that HAL will become an important part of ABN AMRO's German business as it will add scale and business diversification. Once assigned, we expect HAL's SSR to be either equalised with or be one notch below ABN AMRO's 'A' Long-Term IDR, depending on the expected degree and speed of HAL's integration into ABN AMRO and its future role in the group.

Integration Risks: We believe that execution risks will be moderate, in view of HAL's smaller size compared with ABN AMRO and the relatively similar strategies between HAL and ABN AMRO's German wealth management activities.

Short-Term IDR: HAL's Short-Term IDR has been placed on RWP to reflect that the acquisition would result in an upgrade of the Short-Term IDR to reflect support from its new owner.

The key rating drivers of HAL's VR are outlined in our rating action commentary published on 06 October 2023 (see 'Fitch Rates Hauck Aufhaeuser Lampe Privatbank 'BBB+'; Outlook Stable' on www.fitchratings.com)

Rating Sensitivities

Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade

The ratings are on RWP; therefore, a negative rating action is unlikely. The IDRs would likely be affirmed and removed from RWP if the announced acquisition does not proceed.

Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade

We expect to upgrade HAL's IDRs on completion of the acquisition and to assign the bank an SSR. We would likely equalise HAL's Long-Term IDR with that of ABN AMRO if we expect a rapid integration of HAL's activities that would show that HAL has become a core part of ABN AMRO. We would likely rate HAL one notch below ABN AMRO if we expect a more gradual integration of the businesses and there are signs that, although strategically important, HAL will not be core to ABN AMRO. After the acquisition, we expect HAL's Long-Term IDR will become driven by its newly assigned SSR.

REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING

The principal sources of information used in the analysis are described in the Applicable Criteria.

Public Ratings with Credit Linkage to other ratings

The RWP on HAL reflects our view that its ratings could benefit from support from ABN AMRO.

ESG Considerations

The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. For more information on Fitch's ESG Relevance Scores, visit https://www.fitchratings.com/topics/esg/products#esg-relevance-scores.

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