Fitch Ratings Affirms Brown Brothers Harriman at 'A+/F1'; Outlook Stable

NEW YORK--(BUSINESS WIRE)--

Fitch Ratings has affirmed the long-term and short-term Issuer Default Ratings (IDRs) for Brown Brothers Harriman & Co. (BBH) at 'A+' and 'F1', respectively. The Rating Outlook is Stable. A complete list of ratings follows at the end of this release

BBH's ratings are underpinned by its consistently strong operating track record, low-risk balance sheet, and solid capital and liquidity position. Ratings also reflect BBH's solid franchise in global custody, focusing on financial institutions and asset managers as clients.

Fitch believes that BBH's partnership structure is the lynchpin of its conservative risk management culture. Each partner is jointly and severally liable for the firm's obligations, which motivates partners to take actions that preserve the long-term value of the firm.

Operating performance has been positive through the financial crisis. Revenues and pre-tax income have rebounded sharply from the depths of the financial crisis due to growth in assets under custody (AUC) and the markets businesses. AUC increased 29% to $3.1 trillion at June 30, 2011 from $2.4 trillion in the prior year. Pre-tax margins are strong and shy of pre-crisis levels.

Credit quality of the loan and investment portfolio withstood the recent financial crisis, reflecting the firm's robust risk management system and its overall low-risk appetite. BBH did not report any non-performing loans (NPLs) for fiscal year-end 2010 and six months ending June 30, 2011. Still, reserves as a percentage of net loans measured 0.59% at June 30, 2011, offering a solid coverage of 60.5x first half 2011 net-charge offs.

BBH's balance sheet is highly liquid, with cash and investment securities comprising 55% of total assets at June 30, 2011. BBH depends on low-cost custodial deposits for all its funding needs, which accounted for 87% of total liabilities. Access to additional liquidity is provided by off-balance sheet cash management deposits totaling $24.9 billion at June 30, 2011.

BBH does not use any financial leverage, which provides it with significant financial flexibility. Capital remains solid and is appropriate for the company's risk profile.

The Stable Outlook reflects Fitch's expectation for consistent operating performance, continued conservative risk management practices, and maintenance of solid capital and liquidity positions.

BBH's ratings are constrained by the business model's sensitivity to external factors, namely financial asset prices and interest rates. Ratings could be lowered if BBH were to incur higher than expected losses in the underlying loans and investment portfolio, and/or material losses from operational errors or litigation.

Founded in 1818 and organized as a partnership, BBH is the oldest and largest privately owned bank in the U.S., operating through 16 offices worldwide and serving clients in over 100 countries. Key products are global custody, foreign exchange services, investment & wealth management, and corporate banking.

Fitch affirms and maintains the Stable Outlook on the following:

Brown Brothers Harriman & Co.
--Long-term IDR 'A+';
--Short-term IDR 'F1';
--Viability Rating 'a+';
--Individual 'A/B';
--Support '5';
--Support Floor 'NF'.

Additional information is available at www.fitchratings.com.

Applicable Criteria and Related Research
--'Global Financial Institutions Rating Criteria' (Aug. 16, 2011);
--'Investment Managers and Alternative Funds' (Dec. 23, 2010).

Applicable Criteria and Related Research:
Global Financial Institutions Rating Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=649171
Investment Manager and Alternative Funds Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=590125

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