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Rating Action:

Moody's downgrades SNS REAAL's and SNS Bank's subordinated and hybrid debt ratings to C respectively C(hyb) following nationalisation

Global Credit Research - 04 Feb 2013

SNS Bank's standalone credit assessment placed on review for upgrade

London, 04 February 2013 -- Moody's Investors Service has today downgraded SNS REAAL's and SNS Bank's dated subordinated debt ratings to C from Caa3 and the entities' Tier 1 securities ratings to C(hyb) from Ca(hyb).

The rating action follows the decision by the Government of the Netherlands (Aaa negative) to nationalise the entire SNS REAAL group on 1 February 2013 under the Intervention Act passed by Parliament in 2012. All issued shares in SNS REAAL NV and SNS Bank NV held outside of SNS REAAL NV or its group companies will be expropriated. As a result, the government will assume 100% control of SNS REAAL and of SNS Bank.

At the same time, Moody's placed SNS Bank's E bank financial strength rating (BFSR), which is equivalent to a standalone credit assessment of ca, on review for upgrade.

All other ratings of the SNS REAAL group remain unaffected by this rating action (see list of affected ratings at the end of the press release).

RATINGS RATIONALE

--- DOWNGRADE OF SUBORDINATED AND HYBRID DEBT RATINGS

As part of the nationalisation, the Minister of Finance announced the expropriation of all dated subordinated debt instruments and of all Tier 1 securities issued by SNS REAAL and SNS Bank. Although the expropriation decree allows bondholders to file objections against this decision within ten days of the date of the publication of the decree, Moody's considers all these expropriated securities to be in default. Given the scale of the government's capital injection relative to the expropriated securities, Moody's believes that there is little prospect for a recovery of principal or interest for these securities. As a result, the rating agency downgraded all these instruments to C respectively to C(hyb).

The expropriation appears to exclude the hybrids issued by SRLEV, the group's life insurance company. The hybrid instruments issued by SRLEV are thus unaffected at B1(hyb), on review with direction uncertain.

--- REVIEW FOR UPGRADE OF SNS BANK'S STANDALONE FINANCIAL STRENGTH

At the time of its announcement, the government also announced that SNS REAAL's problematic real estate portfolio would be isolated and that it would inject EUR2.9 billion of capital, as well as providing a further EUR1.1 billion in state loans and EUR5 billion in state guarantees. These measures are intended to restore the group's and the bank's financial health and to allow for a re-privatisation as soon as feasible, which is the clearly stated intent of the Dutch government.

Moody's believes that these actions have the potential to restore the financial fundamentals of SNS Bank and thereby reduce the risks of a loss in depositor, investor and customer confidence, although the bank's ability to preserve its franchise will need to be assessed over time. As a result, the rating agency has placed SNS Bank's BFSR on review for upgrade.

-- OTHER RATINGS OF THE SNS REAAL GROUP

All other ratings of the SNS REAAL Group, including SNS Bank's senior debt ratings (Baa3/P-3, on review for downgrade), SNS REAAL's senior debt rating (Ba2, on review for downgrade), the insurance financial strength ratings of SRLEV and REAAL Schadeverzekeringen (Baa2, on review for downgrade), as well as the ratings of the hybrids issued by SRLEV (B1(hyb), on review with direction uncertain) are unaffected by this rating action and remain on review.

Moody's review on these ratings will focus on (1) the extent to which the nationalisation and potential remedial measures imposed by the European Commission may dissipate the uncertainty on the future of the banking and insurance operations of the group and reduce the risks of franchise deterioration; and (2) the residual risks for senior creditors of both SNS Bank and SNS REAAL, as well as for the hybrid bondholders of SRLEV.

WHAT COULD MOVE THE RATINGS UP/DOWN

--- SUBORDINATED AND HYBRID DEBT RATINGS

The ratings on dated subordinated debt instruments and Tier 1 securities issued by SNS REAAL and SNS Bank have no outlook. Moody's would consider an upgrade of these securities if Moody's believes there would be meaningful expected recovery for these securities.

--- SNS BANK'S STANDALONE FINANCIAL STRENGTH

SNS Bank's standalone credit assessment may benefit from the nationalisation provided that Moody's considers that the measures (1) would restore the capital of SNS Bank and immunise the group against future losses in SNS Bank's legacy Property Finance portfolio; (2) would reduce the risks of a potential shift in depositor and customer confidence; and (3) would not result in the imposition of material restrictions from the European Commission.

LIST OF AFFECTED RATINGS

The following ratings were downgraded to C with no outlook:

- SNS Bank N.V. -- dated subordinated debt rating to C from Caa3;

- SNS Bank N.V. -- dated subordinate MTN rating to (P)C from (P)Caa3;

- SNS Bank N.V. -- EUR200 million Tier 1 securities (ISIN XS0172565482) rating to C(hyb) from Ca(hyb);

- SNS Bank N.V. -- EUR320 million Tier 1 securities (ISIN XS0468954523) rating to C(hyb) from Ca(hyb);

- SNS REAAL N.V. -- subordinated debt rating to C from Caa3;

- SNS REAAL N.V. -- subordinated MTN rating to (P)C from (P)Caa3.

- SNS REAAL N.V. -- Tier 1 securities rating to C(hyb) from Ca(hyb);

The following rating was placed on review for upgrade:

- SNS Bank N.V. -- bank financial strength rating at E (equivalent to standalone credit assessment of ca).

PRINCIPAL METHODOLOGIES

The principal methodology used in rating SNS Bank N.V. 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.

The principal methodologies used in rating SNS Reaal NV, REAAL Schadeverzekeringen NV and SRLEV NV were Moody's Global Rating Methodology for Property and Casualty Insurers Published in May 2010, Moody's Global Rating Methodology for Life Insurers published in May 2010, and Moody's Guidelines for Rating Insurance Hybrid Securities and Subordinated Debt Published in January 2010. Please see the Credit Policy page on www.moodys.com for a copy of these methodologies.

List of affected Issuers by Releasing Office France:

Releasing Office:

Moody's France SAS

96 Boulevard Haussmann

75008 Paris

France

Issuer : SNS Reaal N.V.

Issuer :SRLEV NV

Issuer: REAAL Schadeverzekeringen NV

REGULATORY DISCLOSURES

For ratings issued on a program, series or category/class of debt, this announcement provides certain 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 certain 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 certain 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.

For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this rating action, and whose ratings may change as a result of this rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.

The person who approved SNS Bank N.V. credit ratings is Carola Schuler, MD - Banking, Financial Institutions Group, JOURNALISTS: 44 20 7772 5456, SUBSCRIBERS: 44 20 7772 5454

The person who approved SNS Reaal NV, REAAL Schadeverzekeringen NV and SRLEV NV credit ratings is Simon Harris, MD - Financial Institutions, Group, Financial Institutions Group, JOURNALISTS: 44 20 7772 5456, SUBSCRIBERS: 44 20 7772 5454

The below contact information is provided for information purposes only. Please see the ratings tab of the issuer page at www.moodys.com, for each of the ratings covered, Moody's disclosures on the lead analyst and the Moody's legal entity that has issued the ratings.

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.

Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.

Stephane Herndl
Asst Vice President - 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 Investors Service Ltd.
One Canada Square
Canary Wharf
London E14 5FA
United Kingdom
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454

Moody's downgrades SNS REAAL's and SNS Bank's subordinated and hybrid debt ratings to C respectively C(hyb) following nationalisation
No Related Data.

 

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