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Announcement:

Moody's changes outlook on Banque et Caisse d'Epargne de l'Etat to negative from stable

Global Credit Research - 25 Jul 2012

Announcement follows outlook change on Luxembourg

Paris, July 25, 2012 -- Moody's Investors Service has today changed the outlook to negative from stable on Banque et Caisse d'Epargne de l'Etat's (BCEE) Aa1 long-term deposit and debt ratings. Today's announcement follows Moody's decision to change to negative from stable the outlook on the Aaa ratings of the government of Luxembourg, as announced on 23 July 2012.

Moody's says that BCEE's standalone credit assessment of C/a3 with stable outlook, its Baa1 subordinated debt rating and Prime-1 short-term debt and deposit ratings are unaffected by today's rating announcement.

For more details on Moody's action on Luxembourg sovereign ratings, please refer to the press release "Moody's changes the outlook to negative on Germany, Netherlands, Luxembourg and affirms Finland's Aaa stable rating," published on 23 July 2012.

For additional information on bank ratings, please refer to the webpage containing Moody's related announcements http://www.moodys.com/eusovereign.

RATINGS RATIONALE

As a fully state-owned institution, BCEE's Aa1 senior unsecured long-term ratings incorporate a very high probability of systemic support. This is underpinned by (i) BCEE's leading position in domestic retail banking; (ii) its full ownership by the Luxembourg government, since the bank was established more than 150 years ago; and (iii) its role in the development of the local economy, in accordance with the bank's statute and objectives, whereby the bank provides financing to certain key economic sectors.

Moody's assessment of this special role played by BCEE in the Luxembourg economy results in a higher-than-usual five notches of uplift from BCEE's standalone credit assessment of a3. However should the creditworthiness of Luxembourg diminish, its capacity to provide such support may also decline. As a result, the change in the outlook to negative on the long-term ratings of BCEE reflects the change of the outlook to negative on the Aaa bond ratings of the government of Luxembourg.

WHAT COULD MOVE THE RATING UP/DOWN

Moody's considers that BCEE's long-term creditworthiness is highly correlated with developments in the Luxembourg local economy as well as weaker European sovereigns and the banking sector more generally, given the bank's material borrower and industry concentrations. Therefore, downward pressure on BCEEs' ratings could develop (i) from a marked deterioration of the institution's financial fundamentals or the perception by Moody's of a weaker risk profile; (ii) if the creditworthiness of the Luxembourg government were to further deteriorate; or (iii) if Moody's considered that there is a lower probability of systemic support for BCEE. As such, any downgrades of the rating of the government of Luxembourg would likely trigger a similar action on the long-term ratings of BCEE.

The principal methodology used in this rating was Moody's Consolidated Global Bank Rating Methodology published in June 2012. Please see the Credit Policy page on www.moodys.com for a copy of this methodology.

REGULATORY DISCLOSURES

For ratings issued on a program, series or category/class of debt, this announcement provides relevant regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides relevant regulatory disclosures in relation to the rating action on the support provider and in relation to each particular rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides relevant regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

The rating has been disclosed to the rated entity or its designated agent(s) and issued with no amendment resulting from that disclosure.

Information sources used to prepare the rating are the following: parties involved in the ratings, public information, and confidential and proprietary Moody's Investors Service information.

Moody's considers the quality of information available on the rated entity, obligation or credit satisfactory for the purposes of issuing a rating.

Moody's adopts all necessary measures so that the information it uses in assigning a rating is of sufficient quality and from sources Moody's considers to be reliable including, when appropriate, independent third-party sources. However, Moody's is not an auditor and cannot in every instance independently verify or validate information received in the rating process.

Moody's Investors Service may have provided Ancillary or Other Permissible Service(s) to the rated entity or its related third parties within the two years preceding the credit rating action. Please see the special report "Ancillary or other permissible services provided to entities rated by MIS's EU credit rating agencies" on the ratings disclosure page on our website www.moodys.com for further information.

Please see the ratings disclosure page on www.moodys.com for general disclosure on potential conflicts of interests.

Please see the ratings disclosure page on www.moodys.com for information on (A) MCO's major shareholders (above 5%) and for (B) further information regarding certain affiliations that may exist between directors of MCO and rated entities as well as (C) the names of entities that hold ratings from MIS that have also publicly reported to the SEC an ownership interest in MCO of more than 5%. A member of the board of directors of this rated entity may also be a member of the board of directors of a shareholder of Moody's Corporation; however, Moody's has not independently verified this matter.

Please see Moody's Rating Symbols and Definitions on the Rating Process page on www.moodys.com for further information on the meaning of each rating category and the definition of default and recovery.

Please see ratings tab on the issuer/entity page on www.moodys.com for the last rating action and the rating history. The date on which some ratings were first released goes back to a time before Moody's ratings were fully digitized and accurate data may not be available. Consequently, Moody's provides a date that it believes is the most reliable and accurate based on the information that is available to it. Please see the ratings disclosure page on our website www.moodys.com for further information.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Stephane Herndl
Analyst
Financial Institutions Group
Moody's France SAS
96 Boulevard Haussmann
Paris 75008
France
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454

Carola Schuler
MD - Banking
Financial Institutions Group
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454

Releasing Office:
Moody's France SAS
96 Boulevard Haussmann
Paris 75008
France
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454

Moody's changes outlook on Banque et Caisse d'Epargne de l'Etat to negative from stable
No Related Data.

 

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