Paris, December 07, 2020 -- Moody's Investors Service (Moody's) today affirmed SFIL's
long-term senior unsecured debt and deposit ratings of Aa3.
The outlook remains stable. SFIL's Baseline Credit Assessment
(BCA) and Adjusted BCA of a3 were also affirmed, together with the
other ratings and assessments, including SFIL's short-term
deposit and issuer ratings of Prime-1, its long-term
and short-term Counterparty Risk Assessments (CR Assessments) of
Aa2(cr) and Prime-1(cr), respectively, and its long-term
and short-term Counterparty Risk Ratings (CRRs) of Aa2 and Prime-1,
respectively.
A full list of affected ratings can be found at the end of this press
release.
RATINGS RATIONALE
SFIL's Aa3 long-term senior unsecured debt and deposit ratings
are underpinned by (1) the entity's BCA of a3; (2) the application
of Moody's Advanced Loss Given Failure (LGF) analysis, which,
given the volume of the bank's senior debt, results in one notch
of uplift from the Adjusted BCA of a3; and (3) government-support
uplift of two notches, reflecting a very high support probability
from its ultimate owner, the Government of France (Aa2 stable).
The affirmation of the a3 BCA reflects the bank's leading position in
the French public-sector financing and its low-risk profile
because of solid asset quality and adequate funding and liquidity.
SFIL's very high nominal leverage and moderate profitability are consistent
with such low-risk profile and assigned public-service mission.
SFIL has successfully originated new business through the distribution
network of La Banque Postale (LBP), which is its commercial partner
for public-sector lending, including in the first half of
2020, despite the lockdown period.
0n 30 September 2020, the equity stakes of the French government
and La Banque Postale in SFIL (75% and 5%, respectively)
were transferred to Caisse des Depots et Consignations (CDC, Aa2
stable), which now holds all of SFIL's shares but one still owned
by the French government. Following this transaction, SFIL's
ownership continues to remain entirely public. Moody's believes
that the probability of government support remains very high for SFIL's
deposits and senior unsecured debt, which results in uplift of two
notches. This assumption is based on (1) CDC's commitment,
as the reference shareholder, to support SFIL's solvency and liquidity
through a letter of comfort, which has been communicated to the
French supervisor (Autorite de Controle Prudentiel et de Regulation,
ACPR); (2) the State's commitment, as the ultimate shareholder,
to support SFIL's solvency and liquidity in case of a default of
CDC through a separate letter of comfort, also communicated to the
ACPR; and (3) the key role SFIL will continue to have in the financing
of the French local authorities and hospitals. Moody's also
believes that the 2018 decision to expand its policy mandate to export
and strategic project financing also enhances SFIL's status and importance
in the domestic market.
OUTLOOK
The outlook on SFIL's long-term issuer and senior unsecured ratings
is stable, in line with the outlook on the Government of France's
debt rating. This results from the very high likelihood of government
support for SFIL. Similar to other European countries, France
is heavily affected by the coronavirus outbreak. Moody's
assumes that the pandemic will have a significant, but eventually
transitory impact on France's economy and fiscal metrics.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
SFIL's long-term ratings could be upgraded as a result of an upgrade
of the Government of France's debt rating.
SFIL's BCA could be downgraded as a result of worse-than-expected
asset performance or weakening capitalization. A lower BCA could
result in a downgrade of the long-term ratings.
SFIL's long-term ratings could also be downgraded in the event
of a significant change in the bank's liability structure, implying
a material reduction in the volume of long-term senior unsecured
debt, and, hence, an increase in loss-given-failure;
a decrease in the probability of government support; or a downgrade
of France's sovereign rating.
LIST OF AFFECTED RATINGS
Issuer: SFIL
..Affirmations:
....Long-term Counterparty Risk Ratings,
affirmed Aa2
....Short-term Counterparty Risk Ratings,
affirmed P-1
....Long-term Bank Deposits,
affirmed Aa3, outlook remains Stable
....Short-term Bank Deposits,
affirmed P-1
....Short-term Deposit Note/CD Program,
affirmed P-1
....Long-term Counterparty Risk Assessment,
affirmed Aa2(cr)
....Short-term Counterparty Risk Assessment,
affirmed P-1(cr)
....Long-term Issuer Ratings,
affirmed Aa3, outlook remains Stable
....Short-term Issuer Ratings,
affirmed P-1
....Baseline Credit Assessment, affirmed
a3
....Adjusted Baseline Credit Assessment,
affirmed a3
....Senior Unsecured Regular Bond/Debenture,
affirmed Aa3, outlook remains Stable
....Senior Unsecured Medium-Term Note
Program, affirmed (P)Aa3
....Commercial Paper, affirmed P-1
..Outlook Action:
....Outlook remains Stable
PRINCIPAL METHODOLOGY
The principal methodology used in these ratings was Banks Methodology
published in November 2019 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1147865.
Alternatively, please see the Rating Methodologies page on www.moodys.com
for a copy of this methodology.
REGULATORY DISCLOSURES
For further specification of Moody's key rating assumptions and
sensitivity analysis, see the sections Methodology Assumptions and
Sensitivity to Assumptions in the disclosure form. Moody's
Rating Symbols and Definitions can be found at: https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_79004.
For ratings issued on a program, series, category/class of
debt or security this announcement provides certain regulatory disclosures
in relation to each rating of a subsequently issued bond or note of the
same series, category/class of debt, security 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.
The ratings have been disclosed to the rated entity or its designated
agent(s) and issued with no amendment resulting from that disclosure.
These ratings are solicited. Please refer to Moody's Policy
for Designating and Assigning Unsolicited Credit Ratings available on
its website www.moodys.com.
Regulatory disclosures contained in this press release apply to the credit
rating and, if applicable, the related rating outlook or rating
review.
Moody's general principles for assessing environmental, social
and governance (ESG) risks in our credit analysis can be found at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1133569.
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.
Roland Auquier
Vice President - Senior Analyst
Financial Institutions Group
Moody's France SAS
96 Boulevard Haussmann
Paris 75008
France
JOURNALISTS: 44 20 7772 5456
Client Service: 44 20 7772 5454
Alain Laurin
Associate Managing Director
Financial Institutions Group
JOURNALISTS: 44 20 7772 5456
Client Service: 44 20 7772 5454
Releasing Office:
Moody's France SAS
96 Boulevard Haussmann
Paris 75008
France
JOURNALISTS: 44 20 7772 5456
Client Service: 44 20 7772 5454
