MOODY'S UPGRADES THE RATINGS OF NON-CUMULATIVE PREFERRED SHARES (AND EQUIVALENT SECURITIES) OF SEVERAL EUROPEAN BANKS; ALL THESE BANKS' OTHER RATINGS REMAIN UNCHANGED
Moody's upgraded the ratings of non-cumulative preferred shares (and equivalent securities) of several banks, thus reducing to one notch the difference between these ratings (using the preferred stock rating symbols) and the banks' senior debt and deposit ratings (using the debt rating symbols). All other ratings of these banks remain unchanged. According to Moody's, these rating actions reflect these banks' good intrinsic fundamentals, as defined by C and C+ financial strength ratings. The rating agency added that for banks with financial strength ratings of A, B+, B, and in some instances C+, the ratings of non-cumulative preferred shares (and equivalent securities) are already positioned at that level.
Moody's said that banks with good intrinsic fundamentals should possess sufficient financial flexibility to avoid in most cases non-payment of dividends on these securities (known also as "hybrid" capital securities and associated with Tier 1 regulatory capital). That said, Moody's pointed out that all such ratings are assigned on a case-by-case basis, and that aside from intrinsic fundamentals, other rating elements include the nature of the dividend non-payment clauses, other terms of the instruments, or occasionally special support the banks may benefit from outside parties.
The following ratings were upgraded:
SEB AB - non-cumulative preferred shares to "a3" from "baa1";
Merita Bank Plc - non-cumulative preferred shares to "a2" from "a3". All long-term ratings continue to remain on review for possible upgrade;
Banco Totta & A‡ores - backed preference stock to "baa1" from "baa2";
Banca Lombarda - non-Cumulative Trust Preferred Securities to "a3" from "baa1";
Intesa - Preferred Capital Company LLC I to "a2" from "a3";
Intesa - Preferred Capital Company LLC II to "a2" from "a3";
BCI US - Funding Trust I to "a2" from "a3";
BCI US - Funding Trust II to "a2" from "a3";
BCI US - Funding Trust III to "a2" from "a3";
Natexis AMBS Company LLC to "a2" from "a3";
HypoVereinsbank Luxembourg SA - silent participation to "a2" from "a3".
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