OREANDA-NEWS. Fitch Ratings has affirmed Paris-based Amundi Group's (Amundi) Long-term Issuer Default Rating (IDR) at 'A+', Short-term IDR at 'F1' and Support Rating at '1'. The Outlook on Amundi's Long-term IDR is Stable.

The actions have been taken by Fitch in conjunction with a broader traditional investment manager industry review. For more commentary on the broader sector review, see 'Fitch Completes Traditional Investment Manager Review; Upgrades AMG and Man; Revises Invesco to Positive', published today and available at 'www.fitchratings.com'.

Fitch assigned initial ratings to Amundi on 22 April 2015 (see 'Fitch Assigns Amundi Group 'A+' Long-term IDR; Outlook Stable'). All of Amundi's key rating drivers and sensitivities described at the time remain unchanged.

Amundi Group is the parent holding company of Amundi, one of Europe's largest asset management firms. It was established in 2010 as a result of the merger of Credit Agricole S.A.'s (CA S.A.; A/Stable/F1, the publicly listed company and central body of Credit Agricole, CA, A/Stable/F1/a) and Societe Generale's (SocGen; A/Stable/F1/a) asset management operations.
At end-2014, Amundi had EUR866bn assets under management (AuM), around 80% of which was from its French businesses and the remainder from its other European (9%), Asian excluding Japan (6%), Japanese (3%) and other (3%) businesses. Amundi is 80% owned by CA S.A. and the remainder by SocGen.
KEY RATING DRIVERS

IDRS
Amundi's IDRs are based on Fitch's standalone assessment of the company and reflect its solid and increasing international franchise and distribution network, and its adequate risk management framework. They also reflect the company's strong profitability, acceptable asset performance, sound liquidity management and low adjusted balance sheet leverage.
The IDRs also take into account Amundi's fairly short track record as a standalone company, its reliance on the distribution network of CA and SocGen and the sensitivity of its profitability to market volatility. Pressure on the French money market fund industry, one of the group's key product lines, is also factored into the ratings.

The group's franchise is among the largest and most diversified in Fitch's asset manager peer group with a particularly strong presence in euro-denominated money market and fixed income funds. Since Amundi's franchise benefits significantly from AuM and well-established distribution channels linked to its shareholders, in our view, its independent franchise is smaller than its AuM base would suggest.
Profitability is sound. Adjusted operating and EBITDA margins are in line with peers and have benefited from positive net new money inflows since 2012. Revenue diversification by product and distribution channel is sound while cost-efficiency metrics compare well with peers.

Asset performance overall is acceptable with strong one- and three-year performances in many fixed income products offsetting somewhat weaker performances in some equity products.
We consider Amundi's risk control framework sound with limited proprietary risk-taking that is centralised and integrated into CA's risk function. Seed money exposure is higher than at many comparable peers but risk is mitigated by exposures mostly relating to low-risk money market funds with the remainder being well diversified.

Balance sheet leverage benefits from the absence of meaningful third-party debt and funding is almost exclusively sourced from CA S.A.. Balance sheet leverage, adjusted for the negative fair value of derivatives, is broadly in line with peers. Adjusted net cash flow leverage (adjusted net debt/adjusted EBITDA) at end-2014 was low at around 0.1x.

Amundi's Short-term IDR of 'F1' reflects the group's sound standalone liquidity but also the Short-term IDR of CA, as the provider of Amundi's back-stop liquidity. Market and liquidity risks are moderate. However, Amundi's guaranteed products and euro medium term notes issuance activities mean that sound liquidity management is crucial for its overall risk profile.

The Stable Outlook reflects Fitch's view that Amundi will continue to report sound profitability while maintaining acceptable gross and net balance sheet leverage.

SUPPORT RATING AND SUPPORT RATING FLOOR
Amundi's Support Rating of '1' reflects our view that support from CA for Amundi is extremely likely, if ever required.

As the manager of CA's insurance assets as well as an important provider of asset management products for CA's (and SocGen's) retail networks, we view Amundi as a core subsidiary for CA. In addition, considering the return for CA (Amundi's dividend pay-out ratio target is 45%), Amundi's business model only ties up limited amounts of regulatory capital and liquidity. This results in superior risk-adjusted returns (compared with CA's retail and corporate banking activities) and means that required resources to support Amundi, if ever needed, would be limited compared with CA's overall size.

Amundi accounted for just under 10% of CA's (and around 23% of CA S.A.'s) pre-tax profit in 2014 but for a significantly smaller proportion of risk-weighted assets at end-2014.

RATING SENSITIVITIES

IDRS
Amundi's IDRs are at the upper end of its asset manager peer group. Upside potential is therefore limited but could in the medium term arise from franchise improvements outside France, including stronger asset performance of its equities franchise, while maintaining current leverage and capitalisation levels.

Downside risks, also limited, could arise from sustained net new money outflows as a result of product underperformance, higher leverage or a markedly increased risk appetite for seed money or voluntary placements. A sizeable operational or reputational loss could also put downward pressure on ratings.

A downgrade of CA's Long-term IDR, while not automatically leading to a downgrade of Amundi, would nonetheless put pressure on Amundi's Long-term IDR given the close integration between the two entities in terms of risk and liquidity management as well as Amundi's reliance on CA's distribution network.

SUPPORT RATING AND SUPPORT RATING FLOOR
The Support Rating is sensitive to a change in the assumptions around the propensity or ability of CA to provide timely support for Amundi. This might for instance arise if the importance of savings products in CA's overall strategy diminishes or if CA's Long-term IDR is downgraded by two or more notches, both considered unlikely by Fitch.