info

Yes No
Moodys.com
Terms of Use
REGULATORY AFFAIRS
CAREERS
DIVERSITY & INCLUSION
.
ABOUT US
.
CONTACT US
HOME
Please Note
We brought you to this page based on your search query. If this isn't what you are looking for, you can continue to Search Results for ""
The maximum number of items you can export is 3,000. Please reduce your list by using the filtering tool to the left.
Close
Close
Email Research
Recipient email addresses will not be used in mailing lists or redistributed.
Recipient's
Email

Use semicolon to separate each address, limit to 20 addresses.
Enter the
characters you see
Can't read?
Try a new set
Send Cancel
Close
Email Research
Thank you for your interest in sharing Moody's Research. You have reached the daily limit of Research email sharings.
OK
Close
Thank you!
You have successfully sent the research.
Please note: some research requires a paid subscription in order to access.
OK
Already a customer?
LOG IN
Don't want to see this again?
REGISTER
OR
Accept our Terms of Use to continue to Moodys.com:

PLEASE READ AND SCROLL DOWN!

 

By clicking “I AGREE” [at the end of this document], you indicate that you understand and intend these terms and conditions to be the legal equivalent of a signed, written contract and equally binding, and that you accept such terms and conditions as a condition of viewing any and all Moody’s inform​ation that becomes accessible to you [after clicking “I AGREE”] (the “Information”).   References herein to “Moody’s” include Moody’s Corporation, Inc. and each of its subsidiaries and affiliates.

 

Terms of One-Time Website Use

 

1.            Unless you have entered into an express written contract with Moody’s to the contrary, you agree that you have no right to use the Information in a commercial or public setting and no right to copy it, save it, print it, sell it, or publish or distribute any portion of it in any form.               

 

2.            You acknowledge and agree that Moody’s credit ratings: (i) are current opinions of the future relative creditworthiness of securities and address no other risk; and (ii) are not statements of current or historical fact or recommendations to purchase, hold or sell particular securities.  Moody’s credit ratings and publications are not intended for retail investors, and it would be reckless and inappropriate for retail investors to use Moody’s credit ratings and publications when making an investment decision.  No warranty, express or implied, as the accuracy, timeliness, completeness, merchantability or fitness for any particular purpose of any Moody’s credit rating is given or made by Moody’s in any form whatsoever.          

 

3.            To the extent permitted by law, Moody’s and its directors, officers, employees, representatives, licensors and suppliers disclaim liability for: (i) any indirect, special, consequential, or incidental losses or damages whatsoever arising from or in connection with use of the Information; and (ii) any direct or compensatory damages caused to any person or entity, including but not limited to by any negligence (but excluding fraud or any other type of liability that by law cannot be excluded) on the part of Moody’s or any of its directors, officers, employees, agents, representatives, licensors or suppliers, arising from or in connection with use of the Information.

 

4.            You agree to read [and be bound by] the more detailed disclosures regarding Moody’s ratings and the limitations of Moody’s liability included in the Information.     

 

5.            You agree that any disputes relating to this agreement or your use of the Information, whether sounding in contract, tort, statute or otherwise, shall be governed by the laws of the State of New York and shall be subject to the exclusive jurisdiction of the courts of the State of New York located in the City and County of New York, Borough of Manhattan.​​​

I AGREE
Rating Action:

Moody's affirms Investec Bank's Baa3/P-3 rating, outlook remains negative

30 Sep 2013

Ratings of Investec plc also affirmed with negative outlook

London, 30 September 2013 -- Moody's Investors Service has today affirmed the Baa3/Prime-3 debt and deposit ratings of UK-based Investec Bank Plc (Investec Bank). Moody's has also affirmed the rating of Investec Bank's parent company, Investec plc, at Ba1, also based in the UK. The outlook on the ratings remains negative and the bank's baseline credit assessment (BCA) is unchanged at baa3.

The affirmation of Investec Bank's investment grade ratings reflects Moody's expectation that the bank will continue to pursue a strategy of risk reduction within the business, by containing legacy risks (primarily related to the commercial real estate sector) in the balance sheet, by limiting risk appetite with new lending and shifting the bank's sources of income towards lower risk and more stable revenue streams primarily in the wealth and asset management segments. The current rating also incorporates the bank's (1) relatively high levels of regulatory capital and solid leverage ratio as compared to peers; and (2) sound liquidity buffers and overall positive evolution of its funding profile. Any deviation from this path of risk reduction or equally, any deterioration in capital or liquidity buffers, could lead to negative pressure on the rating.

The negative outlook on Investec Bank's ratings reflects the still significant downside risk arising from (1) the bank's exposure to commercial and residential real estate in the UK and Ireland; and (2) relatively low profitability metrics limiting its ability to generate capital organically. Moody's outlook also reflects our concern regarding the execution risk related to the integration of recent acquisitions in support of its wealth and investment business as well as the Bank's strategy realignment in Australia. The Bank's streamlining of its Australian business and reorientation towards less volatile sources of revenue is viewed positively, provided successful execution.

Our rating affirmation of the parent company, Investec plc, reflects the structural subordination of the parent company; and remaining exposure to subprime residential mortgages from the legacy portfolio of its subsidiary, Kensington Group plc. This risk is partially offset by the relatively stable earnings of Investec Asset Management, which are expected to provide a buffer against future losses from the Kensington portfolio.

RATINGS RATIONALE

--POSITIVE EVOLUTION OF BUSINESS MODEL SHOULD GENERATE MORE STABLE EARNINGS IF EXECUTION RISKS CAN BE MANAGED

Moody's believes that Investec Bank's reshaped business model with greater focus on activities that generate more stable fee and commission income is positive for bondholders since it provides a diversification and, due to the lower expected volatility of this earnings source, a better 'shock absorber' against potential losses arising from its legacy CRE portfolio. For the year ended March 2013, net fee and commission income increased by a significant 23% to GBP386 million from GBP313 million at the end of March 2012 as the bank benefited from higher average funds under management in its wealth and investment business due to the acquisitions of Williams de Broë and the NCB Group. Overall, pre-tax profit increased by 52% during the year ended March 2013 to GBP57 million. The increase was also driven by lower impairment charges and an increase in net interest income by 12% to GBP 288 million in the year ended March 2013 from GBP 258 million in the year ended March 2012, largely due to a decline in the cost of funding and a larger loan book.

However, Moody's considers that the size of Investec Bank's principal investments portfolio, the risk embedded in its loan book and the continued focus on opportunistic transactions exposes the bank to volatility in earnings. Despite growth in its wealth and investment business, which has been achieved through recent acquisitions, the bank still faces execution risk in its objective to bring down costs to an appropriate level, as part of its wider strategic pursuit to improve profitability.

--ASSET QUALITY WILL LIKELY IMPROVE BUT DOWNSIDE RISK REMAINS IN CREDIT PORTFOLIO

Moody's expects impairment charges to continue to decline, following a reduction in the bank's exposure to commercial and residential real estate planning and development during the year. This decline in impairment charges is reflective of a trend seen across UK lending institutions as the UK economic environment improves. According to Moody's calculations, Investec Bank's problem loan ratio declined to 4.63% at the end of March 2013 from 4.67% at the end of March 2012. The continuing low interest rate environment clearly supports this trend, but any notable deviation from this improving trend is likely to lead to pressure on the rating.

A significant proportion of the bank's gross defaults continue to emanate from Investec Bank's portfolios of loans collateralised by property. Moody's believes that UK banks with significant commercial real estate (CRE) exposures still face material downside risk. In Investec Bank's case, this risk is dampened by the fact that a large proportion of collateral properties are located in regions that have experienced a relatively limited decline in property prices. Conversely, Investec Bank's relatively smaller balance sheet, versus its larger peers, and less granular portfolio, together with its more opportunistic strategy which is shifting the bank's focus towards other assets, exposes the bank to greater volatility from the performance and valuation of these concentrated risks.

--CAPITAL LEVELS HELP MITIGATE POTENTIAL DOWNSIDE RISKS

Under Moody's stress scenario, Investec Bank would have sufficient capital to remain above minimum regulatory requirements. Such capital levels have allowed the bank buffers to absorb interim pressure within its portfolio, allowing time to work through and maximise value of recovery from defaults within its portfolio. The bank's Tier 1 ratio remained strong at 11.1% at the end of March 2013, despite declining from 11.5% in YE03/2012 due to an increase in risk-weighted assets on the back of growth in corporate lending and operational risk. Investec Bank uses the standardised approach for Pillar 1 credit risk and operational risk capital requirements and therefore its capital ratios are not directly comparable with firms using internal models.

STRONG LIQUIDITY BUFFERS REDUCE POTENTIAL FOR FUNDING SHOCKS

Moody's believes that Investec Bank's liquidity management is strong and it maintains a prudent funding profile given the nature of its business model. As of 31 March 2013, the bank held a liquidity buffer of GBP4.5bn, or around 21% of total liabilities and equity. This liquidity is held in the form of cash balances with the central bank or in highly rated securities and unencumbered assets eligible to be pledged with the central bank to raise liquidity. The banks' funding gap, or loan-to-deposit ratio, has improved to 84% as of March 2013, which compares favourably versus a UK rated peer average of 95% (December 2012). Moody's also notes that the bank increased its customer deposits to GBP11.4 billion as of March 2013 from GBP11.1 billion as of March 2012. Given the relatively larger average customer balance of Investec Bank's private banking deposits, the bank's retail funding is less granular as compared with other large UK retail banks.

What Could Move the Rating -- Up

Positive ratings pressure on the ratings is unlikely to materialise at this stage. However, pressure towards a stabilisation of the outlook or upwards rating pressure could arise from a combination of the following factors: a sustained increase in the proportion of stable earnings sources which diversify the bank's exposure to weaknesses in the UK commercial property markets; significant and sustainable improvement in Investec Bank 's profitability and efficiency ratios; material shift in its lending profile towards more diverse, lower risk credits as well as an increase in the proportion of stickier, longer-term customer deposits.

What Could Move the Rating -- Down

Investec Bank plc's standalone and deposit ratings would experience negative pressure from a number of factors, particularly a deviation from the improving trend in Investec Bank's asset quality, reflected in a significant increase in the bank's current problem loan ratio of 4.63%. The rating would likely come under pressure in the event Investec Bank deviates from its present strategy of reducing risk and diversifying its revenue base towards lower risk businesses.

Other areas of concern include lending growth which outpaces customer deposit growth, further deterioration in the bank's cost-income ratio beyond its reported current level of 75.3% or a deterioration of its present adequate level of capitalisation (as of March 2013 reported Tier 1 ratio was 11.1%, down from 11.5% as of March 2012).

LIST OF AFFECTED RATINGS

The following ratings were affirmed:

INVESTEC BANK PLC

- Baseline credit assessment (BCA) at baa3 and the Bank Financial Strength Rating (BFSR) at D+

- Negative outlook of the BCA and stable outlook of the BFSR, given it can either map into a BCA of baa3 or ba1

- Short-term local-currency and foreign-currency deposit ratings; Commercial Paper foreign-currency rating and Deposit Note foreign-currency program at Prime-3

- Long-term local-currency and foreign-currency deposit rating at Baa3 and the Negative outlook

- Subordinate Long-term local-currency rating at Ba1 and the Negative outlook

INVESTEC PLC

- Long-term and short-term foreign-currency issuer rating at Ba1 and Not Prime respectively

- Negative outlook on the Long-term foreign-currency issuer rating

INVESTEC TIER 1 (UK) LP

- Long-term Pref. Stock Non-cumulative foreign-currency BACKED by Investec plc at B1 (hyb) and the Negative outlook

INVESTEC FINANCE PLC (all ratings BACKED by Investec Bank plc)

- Senior unsecured local-currency MTN program at (P)Baa3

- Subordinate local-currency MTN program at (P)Ba1

- Junior subordinate local-currency MTN at (P)Ba2

- Subordinate local-currency rating at Ba1 and the Negative outlook

- Junior subordinate local-currency rating at Ba2(hyb) and the Negative outlook

- Short-term local-currency debt rating and foreign-currency at (P)Prime-3

- Commercial Paper foreign-currency rating at Prime-3

The principal methodology used in these ratings was Global Banks published in May 2013. Please see the Credit Policy page on www.moodys.com for a copy of this methodology.

REGULATORY DISCLOSURES

For ratings issued on a program, series or category/class of debt, this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the rating action on the support provider and in relation to each particular rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this rating action, and whose ratings may change as a result of this rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.

Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.

Carlos Suarez Duarte
Vice President - Senior Analyst
Financial Institutions Group
Moody's Investors Service Ltd.
One Canada Square
Canary Wharf
London E14 5FA
United Kingdom
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454

Johannes Felix Wassenberg
MD - Banking
Financial Institutions Group
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454

Releasing Office:
Moody's Investors Service Ltd.
One Canada Square
Canary Wharf
London E14 5FA
United Kingdom
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454

Moody's affirms Investec Bank's Baa3/P-3 rating, outlook remains negative
No Related Data.
© 2021 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All rights reserved.

CREDIT RATINGS ISSUED BY MOODY'S CREDIT RATINGS AFFILIATES ARE THEIR CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND MATERIALS, PRODUCTS, SERVICES AND INFORMATION PUBLISHED BY MOODY’S (COLLECTIVELY, “PUBLICATIONS”) MAY INCLUDE SUCH CURRENT OPINIONS. MOODY’S DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT OR IMPAIRMENT. SEE APPLICABLE MOODY’S RATING SYMBOLS AND DEFINITIONS PUBLICATION FOR INFORMATION ON THE TYPES OF CONTRACTUAL FINANCIAL OBLIGATIONS ADDRESSED BY MOODY’S CREDIT RATINGS. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS, NON-CREDIT ASSESSMENTS (“ASSESSMENTS”), AND OTHER OPINIONS INCLUDED IN MOODY’S PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. MOODY’S PUBLICATIONS MAY ALSO INCLUDE QUANTITATIVE MODEL-BASED ESTIMATES OF CREDIT RISK AND RELATED OPINIONS OR COMMENTARY PUBLISHED BY MOODY’S ANALYTICS, INC. AND/OR ITS AFFILIATES. MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS DO NOT COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MOODY’S ISSUES ITS CREDIT RATINGS, ASSESSMENTS AND OTHER OPINIONS AND PUBLISHES ITS PUBLICATIONS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL, WITH DUE CARE, MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING, OR SALE.

MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS, AND PUBLICATIONS ARE NOT INTENDED FOR USE BY RETAIL INVESTORS AND IT WOULD BE RECKLESS AND INAPPROPRIATE FOR RETAIL INVESTORS TO USE MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS OR PUBLICATIONS WHEN MAKING AN INVESTMENT DECISION. IF IN DOUBT YOU SHOULD CONTACT YOUR FINANCIAL OR OTHER PROFESSIONAL ADVISER.

ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY LAW, INCLUDING BUT NOT LIMITED TO, COPYRIGHT LAW, AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT MOODY’S PRIOR WRITTEN CONSENT.

MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS ARE NOT INTENDED FOR USE BY ANY PERSON AS A BENCHMARK AS THAT TERM IS DEFINED FOR REGULATORY PURPOSES AND MUST NOT BE USED IN ANY WAY THAT COULD RESULT IN THEM BEING CONSIDERED A BENCHMARK.

All information contained herein is obtained by MOODY’S from sources believed by it to be accurate and reliable. Because of the possibility of human or mechanical error as well as other factors, however, all information contained herein is provided “AS IS” without warranty of any kind. MOODY'S adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources MOODY'S considers to be reliable including, when appropriate, independent third-party sources. However, MOODY’S is not an auditor and cannot in every instance independently verify or validate information received in the rating process or in preparing its Publications.

To the extent permitted by law, MOODY’S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability to any person or entity for any indirect, special, consequential, or incidental losses or damages whatsoever arising from or in connection with the information contained herein or the use of or inability to use any such information, even if MOODY’S or any of its directors, officers, employees, agents, representatives, licensors or suppliers is advised in advance of the possibility of such losses or damages, including but not limited to: (a) any loss of present or prospective profits or (b) any loss or damage arising where the relevant financial instrument is not the subject of a particular credit rating assigned by MOODY’S.

To the extent permitted by law, MOODY’S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability for any direct or compensatory losses or damages caused to any person or entity, including but not limited to by any negligence (but excluding fraud, willful misconduct or any other type of liability that, for the avoidance of doubt, by law cannot be excluded) on the part of, or any contingency within or beyond the control of, MOODY’S or any of its directors, officers, employees, agents, representatives, licensors or suppliers, arising from or in connection with the information contained herein or the use of or inability to use any such information.

NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY CREDIT RATING, ASSESSMENT, OTHER OPINION OR INFORMATION IS GIVEN OR MADE BY MOODY’S IN ANY FORM OR MANNER WHATSOEVER.

Moody’s Investors Service, Inc., a wholly-owned credit rating agency subsidiary of Moody’s Corporation (“MCO”), hereby discloses that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by Moody’s Investors Service, Inc. have, prior to assignment of any credit rating, agreed to pay to Moody’s Investors Service, Inc. for credit ratings opinions and services rendered by it fees ranging from $1,000 to approximately $5,000,000. MCO and Moody’s Investors Service also maintain policies and procedures to address the independence of Moody’s Investors Service credit ratings and credit rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold credit ratings from Moody’s Investors Service and have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is posted annually at www.moodys.com under the heading “Investor Relations — Corporate Governance — Director and Shareholder Affiliation Policy.”

Additional terms for Australia only: Any publication into Australia of this document is pursuant to the Australian Financial Services License of MOODY’S affiliate, Moody’s Investors Service Pty Limited ABN 61 003 399 657AFSL 336969 and/or Moody’s Analytics Australia Pty Ltd ABN 94 105 136 972 AFSL 383569 (as applicable). This document is intended to be provided only to “wholesale clients” within the meaning of section 761G of the Corporations Act 2001. By continuing to access this document from within Australia, you represent to MOODY’S that you are, or are accessing the document as a representative of, a “wholesale client” and that neither you nor the entity you represent will directly or indirectly disseminate this document or its contents to “retail clients” within the meaning of section 761G of the Corporations Act 2001. MOODY’S credit rating is an opinion as to the creditworthiness of a debt obligation of the issuer, not on the equity securities of the issuer or any form of security that is available to retail investors.

Additional terms for Japan only: Moody's Japan K.K. (“MJKK”) is a wholly-owned credit rating agency subsidiary of Moody's Group Japan G.K., which is wholly-owned by Moody’s Overseas Holdings Inc., a wholly-owned subsidiary of MCO. Moody’s SF Japan K.K. (“MSFJ”) is a wholly-owned credit rating agency subsidiary of MJKK. MSFJ is not a Nationally Recognized Statistical Rating Organization (“NRSRO”). Therefore, credit ratings assigned by MSFJ are Non-NRSRO Credit Ratings. Non-NRSRO Credit Ratings are assigned by an entity that is not a NRSRO and, consequently, the rated obligation will not qualify for certain types of treatment under U.S. laws. MJKK and MSFJ are credit rating agencies registered with the Japan Financial Services Agency and their registration numbers are FSA Commissioner (Ratings) No. 2 and 3 respectively.

MJKK or MSFJ (as applicable) hereby disclose that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MJKK or MSFJ (as applicable) have, prior to assignment of any credit rating, agreed to pay to MJKK or MSFJ (as applicable) for credit ratings opinions and services rendered by it fees ranging from JPY125,000 to approximately JPY550,000,000.

MJKK and MSFJ also maintain policies and procedures to address Japanese regulatory requirements.

​
Moodys.com