Approximately EUR 105 Billion of Debt Securities are Affected.
London, 14 March 2001 -- Moody's Investors Service placed under review for possible downgrade the
Aa1/B+ ratings of Dexia Bank Belgium and Dexia Credit Local.
The long-term ratings of the other Dexia Group entities rated by
Moody's were also placed under review for possible downgrade with the
exception of the Aaa ratings of the obligations foncieres (secured mortgage
bonds) of Dexia Municipal Agency. The Aaa ratings of the US financial
guarantor Financial Security Assurance, Inc. (FSA) are also
unaffected. In a related action, Moody's placed under review
for possible upgrade the A2/C ratings of Artesia Banking Corporation and
of its rated subsidiaries. The short-term deposit and debt
ratings of both banking groups' rated entities were confirmed at Prime-1.
According to Moody's, these rating actions follow the announcement
of the two banking groups' plan for a full legal merger before end-June
2001.
Moody's said that the acquisition of Artesia is consistent with Dexia's
long-established strategy of expanding in its core business lines.
The merger of Dexia Bank Belgium and Artesia would create the second largest
commercial banking group in Belgium with important market shares in key
product areas. As a result, the competitive position of the
new Dexia Bank Belgium is reinforced, notably in the areas of life
insurance, asset management and private banking, and financial
services to small- and medium-sized companies. The
merger should provide opportunities for both economies of scale and revenue
enhancements. Economies of scale should come from the rationalization
of the merging banks' domestic retail networks. Revenue enhancements
are expected mainly from cross-selling opportunities between the
two merging banks.
Moody's further commented that, even though the financial profile
of the expanded Dexia Bank Belgium should be characterized by good profitability,
sound asset quality and solid capital adequacy, the risk profile
of the new bank is comparatively higher than that of both Dexia Bank Belgium
at present as well as of the Dexia Group as a whole, considering
the somewhat higher risk appetite of Artesia. In addition,
commercial banking activities would henceforth carry a greater weight
relative to public sector lending and asset management activities.
Moody's concluded by remarking that, while the Dexia Group has a
good track record of rapidly integrating new acquisitions, social,
political and cultural impediments in Belgium might slow the merger integration
process and consequently delay the realization of merger benefits over
the short-term.
The following ratings were placed under review for possible downgrade:
- Dexia Bank Belgium - long-term deposit rating at
Aa1, junior subordinated debt ratings at Aa2, and financial
strength rating at B+;
- Dexia Credit Local - long-term deposit and senior
unsecured debt ratings at Aa1, subordinated debt ratings at Aa2,
financial strength rating at B+, and issuer rating at Aa1;
- Dexia Banque Internationale a Luxembourg - long-term
deposit and senior unsecured debt ratings at Aa2, subordinated debt
ratings at Aa3, and issuer rating at Aa2;
- Crediop SpA - long-term deposit and senior unsecured
debt ratings at Aa2, and subordinated debt ratings at Aa3;
- Crediop Credito per le Imprese e Opere Pubbliche - long-term
senior unsecured debt ratings at Aa2;
- Dexia CLF Finance Co. - backed senior unsecured
debt ratings at Aa1;
- Dexia Kommunbank - backed long-term deposit rating
at Aa1;
- Dexia Municipal Bank - backed long-term deposit
rating at Aa1;
- Dexia Funding Netherlands - backed long-term senior
unsecured debt ratings at Aa1 and subordinated debt ratings at Aa2;
- Crediop Overseas Bank Limited - backed long-term
senior unsecured debt ratings at Aa2 and subordinated debt ratings at
Aa3; and
- Financement Local et Regional (Floral) - backed long-term
senior unsecured debt ratings at Aa1.
The following ratings were placed under review for possible upgrade:
- Artesia Banking Corporation - long-term deposit
rating at A2, bank financial strength rating at C, and issuer
rating at A2;
- BACOB Bank S.C. - junior subordinated debt
rating at A3; and
- Artesia Overseas Limited - backed long-term senior
unsecured debt ratings at A2, subordinated debt ratings at A3.
The following ratings were confirmed:
- Dexia Municipal Agency - secured mortgage bond ratings
at Aaa;
- Dexia Bank Belgium - short-term deposit rating
at Prime-1;
- Artesia Banking Corporation - short-term deposit
rating at Prime-1;
- Dexia Credit Local - short-term deposit and debt
ratings at Prime-1;
- Dexia Banque Internationale a Luxembourg - short-term
deposit and debt ratings at Prime-1, and bank financial strength
rating at B;
- Artesia Delaware Inc. - backed short-term
debt ratings at Prime-1;
- Artesia Overseas Limited - backed short-term debt
rating at Prime-1;
- Crediop SpA - short-term deposit and debt ratings
at Prime-1 and bank financial strength rating at B;
- Dexia Delaware LLC - backed USCP rating at Prime-1;
- Dexia CLF Finance Co. - backed USCP rating at Prime-1;
- Dexia Kommunbank - backed short-term deposit rating
at Prime-1;
- Dexia Municipal Bank plc - backed short-term deposit
rating at Prime-1;
- Dexia Funding Netherlands - backed short-term debt
ratings at Prime-1; and
- Crediop Overseas Bank Limited - backed short-term
debt rating at Prime-1.
The Dexia Group and Artesia Banking Corporation are both headquartered
in Brussels, Belgium. At end-2000, the Dexia
Group had total assets of EUR 258 billion while Artesia Banking Corporation
had consolidated assets of EUR 75 billion.
London
Alexandra A. Sleator
VP - Senior Credit Officer
Financial Institutions Group
Moody's Investors Service Ltd.
44 20 7772 5454
London
Henry MacNevin
VP - Senior Credit Officer
Financial Institutions Group
Moody's Investors Service Ltd.
44 20 7772 5454
MOODY'S REVIEWS FOR POSSIBLE DOWNGRADE Aa1/B+ RATINGS OF DEXIA BANK BELGIUM, DEXIA CREDIT LOCAL AND OTHER DEXIA SUBSIDIARIES; ALSO REVIEWS FOR POSSIBLE UPGRADE A2/C RATINGS OF ARTESIA BANKING CORPORATION FOLLOWING THE TWO GROUPS' ANNOUNCED MERGER PLAN