MOODY'S CONFIRMS BANCO SANTANDER'S RATINGS AT Aa3/P-1/B AND PLACES UNDER REVIEW FOR POSSIBLE UPGRADE THE LONG-TERM DEBT RATING OF BANESTO (SENIOR AT A2)
London, 02-19-98 -- Moody's Investors Service confirmed the Aa3/Prime-1 ratings and B financial strength rating of Banco Santander S.A. and placed under review for possible upgrade the A2 long-term debt rating of Banco Espanol de Credito, S.A. (Banesto). The financial strength rating of Banesto was confirmed at C and its outlook remains positive.
According to Moody's, this rating action follows today's announcement that the Board of Directors of Banco Santander, S.A. has asked for authorisation to make a public exchange offer for Banesto's shares in order to increase its stake in the company to 100%. As Banesto's controlling shareholder with a 48.1% stake, our existing ratings on Santander already incorporate the assessment of the creditworthiness of the entire group, and thus, were confirmed. Notwithstanding the above, Moody's believes that this further integration of both institutions should give rise to opportunities for both efficiency and revenue enhancement for the entire group. The review process of Banesto's ratings will focus on the outcome of the public exchange offer (expected by April 1998) which, if successful, will reflect a more positive assessment of the effectiveness of Banco Santander's controls of and support for Banesto. Banesto is part of the Banco Santander Group since 1994. Banco Santander has stated publicly that a complete merger with Banesto will not occur for the time being.
The following ratings were confirmed:
Banco Santander, S.A. -- ratings on the bank for long-term deposits, senior debt and counterparty obligations at Aa3, the rating for subordinated debt at A1, the short-term rating at Prime-1, and the B financial strength rating.
Santander Finance Ltd. -- the guaranteed preferred stock rating at "a2".
Santander Financial Issuances -- the regular subordinated debt rating at A1 and the guaranteed debt rating at A2 (with an interest deferral clause).
Santander International Limited -- the rating for guaranteed senior debt at Aa3.
Santander Overseas Bank -- the guaranteed preferred stock rating at "a2".
Santander Finance Delaware -- the guaranteed commercial paper rating at Prime-1.
Banco Espanol de Credito, S.A. -- - ratings on the bank for short-term deposits and the C financial strength rating.
Banesto Issuances -- the guaranteed commercial paper rating at Prime-1.
The following ratings were placed under review for possible upgrade:
Banco Espanol de Credito, S.A. -- ratings on the bank for long-term deposits and counterparty obligations at A2.
Banesto Finance Limited -- the regular subordinated debt rating at A3 and the guaranteed undated subordinated debt rating at Baa1 (with an interest deferral clause).
Banesto Holdings -- the guaranteed preferred stock rating at "baa1"
Banco Santander, S.A., is headquartered in Santander, Spain. At year-end 1997, total assets for the group amounted to Ptas. 26 trillion (US$ 171 bn). Banco Espanol de Credito, S.A., is headquartered in Madrid, Spain. At year-end 1997, total asset amounted to Ptas. 5.6 trillion (US$ 45 billion).
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