| Credit Suisse Finance India Private Limited | ||||
| Long-term rating continues on ‘Watch Developing’; Short-term rating reaffirmed | ||||
| Rating Action | ||||
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| Note: None of the Directors on CRISIL Ratings Limited’s Board are members of rating committee and thus do not participate in discussion or assignment of any ratings. The Board of Directors also does not discuss any ratings at its meetings. | ||||
| 1 crore = 10 million | ||||
| Refer to Annexure for Details of Instruments & Bank Facilities |
Detailed Rationale CRISIL Ratings' rating on the Non-Convertible Debentures of Credit Suisse Finance India Private Limited (CSFIL) continues on 'Rating Watch with Developing Implications'. The rating on the Commercial Paper has been reaffirmed at 'CRISIL A1+'
The rating on the debt instruments of CSFIL continues to factor in the support from its parent, Credit Suisse AG. S&P Global Ratings (S&P) has counterparty credit rating of ‘A/Watch Developing/A-1’ on Credit Suisse AG.
On June 12, 2023, S&P has raised its long term credit rating on Credit Suisse AG -the subsidiary of Credit Suisse Group AG, now acquired by UBS Group, to 'A' from 'A-'. The outlook is ‘Watch with Developing Implications’. At the same time, S&P raised their 'A-2' short-term issuer credit rating to ‘A-1‘ on Credit Suisse AG.
The rating action factors UBS Group AG, closing the acquisition of Credit Suisse Group AG and its subsidiaries on June 12, 2023, with all Credit Suisse's Group AG's assets, liabilities, and contracts merged into UBS Group AG. Credit Suisse AG will continue to conduct its business in the ordinary course and implement its restructuring measures in collaboration with UBS.
S&P expects to raise their rating if execution risk related to the integration reduces significantly, with UBS maintaining its strong creditworthiness post-merger and there is no substantial change from their operating assumptions.
The existing rating on CSFIL factors in expectation that company will continue to be held mainly by Credit Suisse AG and that support, if required, will be made available to CSFIL. Further, the rating also factors in importance of CSFIL to its parent, as it is the flagship entity for the group’s lending and debt syndication activities in India.
CRISIL Ratings will monitor the impact of this development on CSFIL’s positioning in the UBS group structure and its business and financial synergies with the merged entity. The watch will be resolved once greater clarity emerges on these aspects.
CSFIL’s networth stood at Rs 2,374 crore and nil gearing as on March 31, 2023. As of May 31, 2023, CSFIL had around Rs 800 crores of liquidity (including Rs 398 crore of cash and cash equivalents) against no repayments due till November 30, 2023. |
Analytical Approach For arriving at its ratings, CRISIL Ratings has combined the business and financial risk profiles of CSFIL and Credit Suisse Securities (India) Pvt Ltd (CSSIL), which is into institutional broking and investment banking. CSFIL and CSSIL are together referred to as ‘the combine’. There are significant operational linkages between the companies in the Credit Suisse group.
CRISIL Ratings' ratings on CSFIL’s debt instruments factor in from the parentage of Credit Suisse AG (rated ‘A/Watch Developing/A-1’ by S&P). CSFIL is owned by Credit Suisse Investment Holdings (Mauritius) Ltd (CSIHML), which in turn is wholly owned by UBS Group AG, the group’s main operating company.
Please refer Annexure - List of Entities Consolidated, which captures the list of entities considered and their analytical treatment of consolidation. |
Key Rating Drivers & Detailed Description Strengths: Expectation of strong support from the parent CSFIL was acquired by Credit Suisse AG in July 2008, and there has been no change in the holding structure since then. Credit Suisse AG is also the holding company for most of the international subsidiaries of the Credit Suisse group. Credit Suisse AG is expected to continue to provide capital support to CSFIL through CSIHML. Additionally, it is envisaged that the parent will ensure CSFIL meets all its financial obligations fully and on time.
CSFIL has been strategically important to Credit Suisse AG’s India operations given that it remains the flagship entity for the group’s lending and debt syndication activities in the country. CSFIL’s target business segments include promoter financing, acquisition financing, loans against shares, margin financing.
CSFIL has benefited from continued management, branding, funding and operational linkages with Credit Suisse AG’s India branch. CSFIL’s board has representation from Credit Suisse AG’s senior management in India, and the latter has been involved in strategic decision making. CSFIL’s risk management policies are in line with the risk management policies and processes of Credit Suisse AG’s India branch.
However, amidst the reorganisation and restructuring by Credit Suisse AG in consultation with UBS Group AG, CRISIL Ratings will monitor the impact of this development on CSFIL’s positioning in the UBS group structure post merger and its business and financial synergies with the merged entity.
Comfortable capitalisation CSFIL has a comfortable capital position. As on March 31, 2023, CSFIL has Tier 1 capital adequacy ratio of 150.64% of risk-weighted assets, with networth of Rs 2,374 crore (Rs 2,268 crore as on March 31, 2022). The parent has infused around Rs 1,260 crore into CSFIL since July 2008. CSFIL’s capitalisation should remain comfortable for the proposed scale of operations in India.
CSSIL reported PAT of Rs 88 crore on total income of Rs 383 crore in fiscal 2023. Capitalisation is adequate, with networth of Rs 1,844 crore as on March 31, 2023 (Rs 1,754 crore as on March 31, 2022).
Weakness: Small scale of operations Compared to other capital-market-related asset-financing companies, CSFIL’s operations are relatively small with a loan portfolio was Rs 1,983 crore as on March 31, 2023 (Rs 2,003 crore as on March 31, 2022). However, CSSIL houses the group’s institutional equities division, which began operations in early 2007 and now ranks among the leading foreign brokerage houses in India. |
Liquidity: Superior As of May 31, 2023, CSFIL has around Rs 800 crores of liquidity (including Rs 398 crore of cash and cash equivalents) against no repayments due till November 30, 2023. |
Rating Sensitivity factors Downward factors
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About the Company CSFIL, formerly Bokadia Marketing and Finance Pvt Ltd, was acquired by Credit Suisse AG in July 2008. The parent has infused around Rs 1,260 crore in CSFIL since the acquisition. Target business segments include promoter financing, acquisition financing, loans against shares, margin financing. Loan portfolio was Rs 1,983 crore as on March 31, 2023 (Rs 2,003 crore as on March 31, 2022).
CSSIL is into institutional broking and is a registered merchant banker and portfolio manager. It reported PAT of Rs 88 crore on total income of Rs 383 crore in fiscal 2023. Capitalisation is adequate, with networth of Rs 1,844 crore as on March 31, 2023, (Rs 1,754 crore as on March 31, 2022). |
Key Financial Indicators : CSFIL
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Any other information: Not applicable |
Note on complexity levels of the rated instrument: |
Annexure - Details of Instrument(s)
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Annexure – List of entities consolidated
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Criteria Details
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