Rating action follows the completion of the mergers of the group's subsidiaries in Finland, Denmark and Norway into Nordea Bank
London, 04 January 2017 -- Moody's Investors Service has today affirmed Nordea Bank AB's
(Nordea Bank) Aa3 long-term deposit and senior unsecured debt ratings
and the bank's a3 Baseline Credit Assessment (BCA) and Adjusted
BCA. Nordea Bank's other long-term ratings,
its Prime-1 short-term ratings and its Aa2(cr)/Prime-1(cr)
Counterparty Risk Assessments (CRAs) were also affirmed at the current
levels. The ratings outlook remains stable.
Today's rating action was prompted by Moody's assessment that
Nordea Bank's credit profile remains unchanged following the completion
of its merger with three of its wholly-owned subsidiaries,
Nordea Bank Danmark A/S, Nordea Bank Finland Plc and Nordea Bank
Norge ASA, which came into effect on 2 January 2017.
At the same time, as all the assets and liabilities of Nordea Bank
Danmark, Nordea Bank Finland and Nordea Bank Norge have been assumed
by Nordea Bank and these three subsidiaries have been dissolved,
Moody's has affirmed and subsequently withdrawn their respective
long- and short term ratings, BCAs, adjusted BCAs and
CRAs. However, Moody's has maintained the ratings on
the outstanding debt instruments issued by Nordea Bank Finland and Nordea
Bank Norge at their current levels, which following the mergers,
are now direct obligations of Nordea Bank.
The full list of affected ratings can be found at the bottom of this press
release.
RATINGS RATIONALE
The affirmation of Nordea Bank's a3 BCA, Aa3 long-term
deposit and senior unsecured ratings, its Prime-1 short-term
ratings and its Aa2(cr)/P-1(cr) CRAs reflect Moody's view
that the firm's credit strength is unchanged as a result of the
mergers. While Moody's considers that the mergers will simplify
the group structure, its funding and liquidity management and will
reduce its complexity, the rating agency expects that the associated
benefits will only emerge in the medium to long term and are difficult
to quantify at present. Furthermore, despite the legal completion
of the merger transactions, Moody's considers that there remains
scope for execution risks, mainly operational and legal, which
could weigh on the group's short-term profitability.
The change in legal status of Nordea Bank Danmark, Nordea Bank Finland
and Nordea Bank Norge, which have ceased to exist from 2 January
2017, prompted Moody's to: (1) affirm these entities'
BCAs, Adjusted BCAs, all long and short-term ratings
and CRAs at their current levels, (2) withdraw the relevant BCAs,
adjusted BCA, short- and long-term deposit,
issuer, and programme ratings and their CRAs, subsequent to
their affirmations. With the completion of the merger, the
liabilities of these entities have been transferred and will be borne
in full and unconditionally by Nordea Bank. As such, Moody's
has maintained the ratings on the outstanding debt instruments issued
by Nordea Bank Finland and Nordea Bank Norge at their current levels,
which are now direct obligations of Nordea Bank.
WHAT COULD CHANGE THE RATINGS UP/DOWN
Nordea Bank's ratings could be upgraded if the bank: (1) improves
its profitability without increasing its risk profile; (2) reduces
its reliance on market funding; and/or (3) enhances its liquidity
position. Lower single-name concentration risk could also
benefit Moody's assessment of the bank's BCA.
Nordea Bank's ratings could be downgraded if the bank's:
(1) operating environment deteriorates beyond Moody's current expectations;
(2) asset risk increases more than what Moody's anticipates,
for example due a stark weakening in credit quality; (3) reliance
on wholesale market funding increases; and/or (4) profitability deteriorates.
LIST OF AFFECTED RATINGS
Issuer: Nordea Bank AB
..Affirmations:
....Long-term Counterparty Risk Assessment,
affirmed Aa2(cr)
....Short-term Counterparty Risk Assessment,
affirmed P-1(cr)
....Long-term Deposit Ratings,
affirmed Aa3 Stable
....Short-term Deposit Ratings,
affirmed P-1
....Senior Unsecured Regular Bond/Debenture,
affirmed Aa3 Stable
....Senior Unsecured Medium-Term Note
Program, affirmed (P)Aa3
....Subordinate Regular Bond/Debenture,
affirmed Baa1
....Subordinate Medium-Term Note Program,
affirmed (P)Baa1
....Junior Subordinate Medium-Term
Note Program, affirmed (P)Baa2
....Pref. Stock Non-cumulative,
affirmed Ba1(hyb)
....Pref. Stock Non-cumulative,
affirmed Baa3(hyb)
....Backed Pref. Stock Non-cumulative,
affirmed Baa3 (hyb)
....Commercial Paper, affirmed P-1
....Other Short Term Medium-Term Note
Program, affirmed (P)P-1
....Adjusted Baseline Credit Assessment,
affirmed a3
....Baseline Credit Assessment, affirmed
a3
..Outlook Action:
....Outlook remains Stable
Issuer: Nordea Bank Danmark A/S
..Affirmations:
....Long-term Counterparty Risk Assessment,
affirmed Aa2(cr)
....Short-term Counterparty Risk Assessment,
affirmed P-1(cr)
....Long-term Deposit Ratings,
affirmed Aa3 Stable
....Short-term Deposit Ratings,
affirmed P-1
....Long-term Issuer Rating ,
affirmed Aa3 Stable
....Senior Unsecured Medium-Term Note
Program, affirmed (P)Aa3
....Other Short Term, affirmed (P)P-1
....Adjusted Baseline Credit Assessment,
affirmed a3
....Baseline Credit Assessment, affirmed
baa1
The above ratings will be withdrawn.
..Outlook Actions:
....Outlook remains Stable and will change
to Ratings Withdrawn
Issuer: Nordea Bank Finland Plc
..Affirmations:
....Long-term Counterparty Risk Assessment,
affirmed Aa2(cr)
....Short-term Counterparty Risk Assessment,
affirmed P-1(cr)
....Long-term Deposit Ratings,
affirmed Aa3 Stable
....Short-term Deposit Ratings,
affirmed P-1
....Long-term Issuer Rating,
affirmed Aa3 Stable
....Senior Unsecured Medium-Term Note
Program, affirmed (P)Aa3
....Subordinate Medium-Term Note Program,
affirmed (P)Baa1
....Junior Subordinate Medium-Term
Note Program, affirmed (P)Baa2
....Other Short-term Medium-Term
Note Program, affirmed (P)P-1
....Adjusted Baseline Credit Assessment,
affirmed a3
....Baseline Credit Assessment, affirmed
a3
The above ratings will be withdrawn.
..Affirmation and assumption by Nordea Bank AB
....Senior Unsecured Regular Bond/Debenture,
affirmed Aa3 Stable
..Outlook Actions:
....Outlook remains Stable and will change
to No Outlook after assumption
Issuer: Nordea Bank Finland Plc, NY Branch
..Affirmation:
....Long-term Deposit Rating,
affirmed Aa3 Stable
The above rating will be withdrawn.
..Affirmation and assumption by Nordea Bank AB
....Senior Unsecured Deposit Note/Takedown,
affirmed Aa3 Stable
..Outlook Actions:
....Outlook remains Stable and will change
to No Outlook after assumption
Issuer: Nordea Bank Norge ASA
..Affirmations:
....Long-term Counterparty Risk Assessment,
affirmed Aa2(cr)
....Short-term Counterparty Risk Assessment,
affirmed P-1(cr)
....Long-term Deposit Ratings,
affirmed Aa3 Stable
....Short-term Deposit Ratings,
affirmed P-1
....Adjusted Baseline Credit Assessment,
affirmed a3
....Baseline Credit Assessment, affirmed
a3
The above ratings will be withdrawn.
..Affirmation and assumption by Nordea Bank AB
....Senior Unsecured Regular Bond/Debenture,
affirmed Aa3 Stable
..Outlook Actions:
....Outlook remains Stable and will change
to No Outlook after assumption
Issuer: Nordea North America, Inc.
Affirmation:
....Backed Commercial Paper, affirmed
P-1
The above rating will be withdrawn.
..Outlook Action:
....No Outlook assigned and will change to
Ratings Withdrawn
PRINCIPAL METHODOLOGY
The principal methodology used in these ratings was Banks published in
January 2016. Please see the Rating Methodologies 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 credit rating action on the support provider and in relation to
each particular credit 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 credit rating action,
and whose ratings may change as a result of this credit 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.
Moody's considers a rated entity or its agent(s) to be participating
when it maintains an overall relationship with Moody's. On
this basis Nordea Bank AB or their agents are considered to be participating
entities. These rated entities or their agents generally provide
Moody's with information for their ratings process.
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.
Andrea Usai
Senior Vice President
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
Sean Marion
MD - Financial Institutions
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
