Approximately $138.3 Billion of Debt Securities Affected.
London, 17 August 2001 -- Moody's Investors Service lowered the long-term deposit and debt
ratings and the financial strength rating of Commerzbank AG from Aa3/B
to A1/B-, respectively. The long-term ratings
and bank financial strength ratings of certain of the group's subsidiaries
were also lowered, as were Hypothekenbank in Essen's mortgage and
public sector Pfandbrief ratings (to Aa2 and Aa1 respectively) and RHEINHYP
Rheinische Hypothekenbank's mortgage Pfandbrief ratings (to Aa1).
The Prime-1 ratings of all of the group's rated entities for short-
term deposits and commercial paper were not on review and were confirmed.
Also confirmed were the Aaa ratings for the public sector Pfandbriefe
of RHEINHYP.
Moody's stated that the rating change reflects Commerzbank group's more
moderate financial flexibility -- both from a recurring
earnings perspective and from an economic capital perspective --
especially in a more dynamic and fluid environment characterised by European
financial-services consolidation, strong competition,
and more challenging financial markets conditions.
The new ratings and their stable outlook continue to reflect Commerzbank
group's position as one of Germany's stronger financial institutions,
with a stable franchise in retail and commercial banking. Various
revenue enhancing and cost saving initiatives should have positive short-
and medium term effects, including a stronger focus on Commerzbank's
core competencies in its German and European markets. Moody's added
that it continues to see the group being characterised by a relatively
diversified revenue base and by stable core funding. As another
positive, any meaningful steps in the consolidation and restructuring
of the highly fragmented German banking system could have positive connotations
for Commerzbank's market position.
Moody's pointed out that the rating changes also incorporate the current
discussions about potential alliances among German mortgage banks.
RHEINHYP Rheinische Hypothekenbank and Hypothekenbank in Essen,
however, continue to benefit from a Patronatserklärung (letter
of comfort) from Commerzbank itself. The A1 senior debt rating
for RHEINHYP also reflects the mortgage bank's sound financial fundamentals
and its good position in residential and commercial mortgage lending.
Regarding the change of these two mortgage banks' Pfandbrief ratings,
Moody's said that it regards the credit characteristics of these debt
instruments to be directly linked to the overall long-term creditworthiness
of the issuing banks -- as primarily defined in their deposit
ratings. Nevertheless, Pfandbrief ratings are higher than
corresponding long-term deposit and debt ratings (public sector
Pfandbrief ratings marginally more than mortgage Pfandbrief ratings),
owing to the more timely debt servicing as well as the greatly reduced
potential loss severity of these collateralised debt instruments in the
event of default of the issuing bank.
In this context Moody's said that RHEINHYP's Aaa-rated public sector
Pfandbriefe continue to warrant top ratings.
The following ratings were lowered:
Commerzbank AG -- senior unsecured debt and deposits to
A1; long-term issuer rating to A1; subordinated debt
to A2; Tier III debt to A3; financial strength to B-.
Commerzbank International S.A. (Luxembourg) --
senior unsecured debt and deposits to A2; subordinated debt to A3.
Commerzbank Europe (Ireland) -- senior unsecured deposits
to A2; long-term issuer rating to A2.
CB Finance Company B.V. -- senior unsecured
debt to A1; subordinated debt to A2.
Commerzbank Overseas Finance N.V. -- senior
unsecured debt to A1; subordinated debt to A2.
Commerzbank U.S. Finance Inc. -- senior
unsecured debt to A1.
Commerzbank AG, Paris Branch -- senior unsecured deposits
to A1.
Commerzbank AG, London Branch -- senior unsecured
debt to A1.
RHEINHYP Rheinische Hypothekenbank AG -- mortgage Pfandbriefe
to Aa1; senior unsecured debt and deposits to A1; subordinated
debt to A2.
Rheinhyp Finance N.V. -- senior unsecured
debt to A1; subordinated debt to A2.
Rheinhyp Bank Europe plc -- senior unsecured debt and deposits
to A2.
Hypothekenbank in Essen AG -- public sector Pfandbriefe
to Aa1; mortgage Pfandbriefe to Aa2; senior unsecured debt and
deposits to A2; subordinated debt to A3.
The following ratings were confirmed:
Commerzbank AG -- short-term debt and deposits at
P-1.
Commerzbank International S.A.(Luxembourg) --
short-term debt and deposits at P-1; financial strength
at C+.
Commerzbank Europe (Ireland) -- short-term deposits
at P-1; financial strength at C-.
CB Finance Company B.V. --short-term
debt at P-1.
Commerzbank Overseas Finance N.V. -- short-term
debt at P-1.
Commerzbank U.S. Finance Inc. -- short-term
debt at P-1.
Commerzbank AG, Paris Branch -- short-term
deposits at P-1.
Commerzbank AG, London Branch -- commercial paper
at P-1.
Commerzbank Europe Finance (Ireland) plc -- commercial paper
at P-1.
Commerz Europe (Ireland), Inc. -- commercial
paper at P-1.
RHEINHYP Rheinische Hypothekenbank AG -- public sector Pfandbriefe
at Aaa; short-term debt and deposits at P-1; financial
strength at B-.
Rheinhyp Finance N.V. -- short-term
debt at P-1.
Rheinhyp Bank Europe plc -- short-term debt and deposits
at P-1; financial strength at C-.
Hypothekenbank in Essen AG -- short-term debt and
deposits at P-1; financial strength at C.
Commerzbank AG, headquartered in Frankfurt, is Germany's fourth
largest banking group with consolidated total assets of 506 billion
at 30 June 2001. RHEINHYP Rheinische Hypothekenbank AG, headquartered
in Frankfurt, is one of Germany's larger mortgage banks with total
assets of 78 billion at 30 June 2001. Hypothekenbank in Essen
is a mortgage bank specialised primarily on public sector lending.
The bank is headquartered in Essen and had total assets of 63 billion
at 30 June 2001.
London
Samuel S. Theodore
Managing Director
Financial Institutions Group
Moody's Investors Service Ltd.
44 20 7772 5454
London
Otto Dichtl
Asst Vice President - Analyst
Financial Institutions Group
Moody's Investors Service Ltd.
44 20 7772 5454
MOODY'S LOWERS TO A1/B- THE LONG-TERM AND FINANCIAL STRENGTH RATINGS OF COMMERZBANK; SUBSIDIARIES' LONG-TERM RATINGS ALSO LOWERED