MOODY'S UPGRADES RATINGS OF BANCO SANTANDER CENTRAL HISPANO TO Aa3/B FROM A1/B-; SUBSIDIARIES' RATINGS ALSO UPGRADED; STABLE OUTLOOK ON NEW RATINGS
Moody's Investors Service upgraded to Aa3 from A1 the long-term ratings and to B from B- the financial strength rating of Banco Santander Central Hispano, S.A. (Santander). The rating outlook is now stable. Also upgraded were the long-term ratings of Banco Español de Credito (Banesto) to Aa3 from A1 and the long-term ratings of Santander Consumer Finance to Aa3 from A1 -- both Spanish subsidiaries of Santander Central Hispano -- as well as the long-term ratings of Banco Totta & Acores (Portugal) to A1 from A2 and of Finconsumo (Italy) to A1 from A2. The rating outlooks are now stable.
The ratings of Banco Santander Puerto Rico (BSPR) were also raised in connection with the upgrade of the bank’s parent. Moody’s upgraded BSPR’s rating for deposits to A1 from A2, the issuer rating to A1 from A2 and bank’s preferred stock to A3 from Baa1. At the same time, BSPR’s bank financial strength rating was confirmed at C. Moody’s added that the Puerto Rico bank is small relative to Santander’s consolidated assets and earnings. Nevertheless, the rating action reflects the probability of strong support from Santander should that become necessary. BSPR’s rating outlook is stable.
Moody's added that any adjustments in Santander's Latin American subsidiaries' ratings will be addressed shortly in a different press release.
According to Moody's, the ratings upgrade reflect the fact that the Santander group appears significantly better sheltered against its exposure to Brazilian risk than at the time when its ratings were lowered to reflect that risk -- more than a year ago. At that time, the rating agency had stated that, aside from the material Brazilian risk, the Spanish banking group's credit strength was fully compatible with a double-A rating.
Moody's noted the measures taken over the recent past by Santander to limit the structural risk for its earnings and economic capital of its large Brazilian investment -- ownership of Banespa. To some extent, these measures were already reflected by Moody's June 2003 outlook change to positive for Santander's ratings. In raising Santander's ratings back to Aa3, Moody's expressed its belief that the banking group's very strong and highly profitable position in the highly competitive Spanish financial services market, its growing pan-European franchise in consumer finance, as well as its good risk and cost controls -- including in Latin America -- should protect well its recurring earnings and economic capital against the remaining Brazilian risk. The rating agency also noted positively Santander's good track record in steering Banespa toward more efficiency and higher profitability.
Moody's concluded by cautioning again that it expects the Santander group to pursue a well-thought and risk-averse strategy in Latin America and avoid harming its overall risk-return profile.
The following ratings were upgraded:
Banco Santander Central Hispano, S.A. -- the long-term deposit rating and senior debt from A1 to Aa3, the issuer rating from A1 to Aa3, the rating on cedulas hipotecarias from Aa2 to Aa1, the rating on cedulas territoriales from Aa1 to Aaa, the financial strength rating from B-to B, and the subordinated debt rating from A2 to A1.
Santander Central Hispano Finance S.A. -- the rating on guaranteed preferred shares from A3 to A2
Santander Central Hispano Financial Services Limited -- the rating on guaranteed subordinated debt from A2 to A1.
Santander Central Hispano International Ltd. -- the rating on guaranteed senior debt from A1 to Aa3.
Santander Central Hispano Issuances -- the rating on guaranteed subordinated debt from A2 to A1.
BSCH Finance Limited -- the rating on guaranteed preferred shares from A3 to A2.
Santander Finance B.V. -- the rating on guaranteed subordinated debt from A2 to A1.
BCH Capital Limited -- the rating on guaranteed preferred shares from A3 to A2.
BCH Cayman Islands Limited -- the rating on guaranteed subordinated debt from A2 to A1.
BCH Eurocapital Limited -- the rating on guaranteed preferred shares from A3 to A2.
BCH Financial Services Limited -- the rating on guaranteed subordinated debt from A2 to A1
BCH International Finance Limited -- the rating on guaranteed senior debt from A1 to Aa3.
Santander Overseas Bank, Inc -- the rating on guaranteed preferred shares from A3 to A2.
Santander Consumer Finance, S.A. -- the rating on commercial paper from A1 to Aa3.
Banco Español de Credito, S.A. -- the bank deposit rating from A1 to Aa3 and the rating on cedulas hipotecarias from Aa2 to Aa1.
Banesto Finance Ltd. -- the rating on guaranteed subordinated debt from A2 to A1.
Banesto Holdings Ltd. -- the rating on guaranteed preferred shares from A3 to A2.
Banesto Issuances Ltd. -- the rating on senior subordinated debt from A1 to Aa3.
Banco Totta y Açores, S.A. -- the long-term deposit and senior debt ratings from A2 to A1.
Totta y Açores Financing Ltd. -- the rating on preferred shares from Baa1 to A3.
Finconsumo -- the long-term ratings from A2 to A1.
Banco Santander Puerto Rico -- long-term deposit rating from A2 to A1, the issuer rating from A2 to A1; and preferred stock from Baa1 to A3.
Santander Central Hispano is headquartered in Santander, Spain. In September 2003 total assets amounted to EUR345 billion.
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