New York, April 13, 2007 -- Moody's Investors Service today published the rating results for banks
in Spain as part of the application of its refined joint default analysis
(JDA) and updated bank financial strength rating (BFSR) methodologies.
BFSRs evaluate the stand-alone or intrinsic financial strength
of banks without reference to external support factors. BFSRs are
the starting point of Moody's bank credit analysis, and are
an important determinant of Moody's bank deposit and debt ratings.
Moody's then uses its JDA methodology to incorporate the potential
for external support into a bank's local currency deposit rating.
The potential for external support can reduce the riskiness of a bank's
deposit and debt obligations; however, such support is often
uncertain. Moody's uses conservative support assumptions
and a limited number of support levels to ensure that sufficient weight
is given to a bank's intrinsic financial strength in its bank deposit
and debt ratings.
Moody's uses deposit ratings to determine bank debt ratings based
on its notching guidelines for bank securities. Ratings for foreign
currency obligations are determined after considering Moody's country
ceilings for foreign currency ratings.
The methodologies are being implemented country by country, with
results being announced on a weekly basis. Results for those banks
with a parent bank located in another country where the methodologies
have not yet been implemented will be concluded at the same time as the
parent.
The largest debt rating upgrade compared to pre-JDA levels was
for Banco Santander, whose rating increased by two notches from
Aa3 to Aa1 on the back of its unchanged BFSR at B and the assigned very
high probability of systemic support. The only debt rating downgrade
in Spain was Santander Consumer Finance, whose rating went to A1
from Aa3 due to both the assigned low systemic support and the fact that
Moody's had overestimated the probability of support coming from its parent,
Santander.
This press release lists the names of issuers in Spain whose ratings have
been changed, affirmed, or put on review. To view ratings
changes and other documents explaining Moody's bank rating methodologies,
please go to www.moodys.com/JDABanks.
Below is a list of banks whose ratings have been upgraded:
Banca March S.A.
Banco Bilbao Vizcaya Argentaria , S.A (BBVA).
Banco Cooperativo Espanol, S.A.
Banco de Credito Local de Espana, S.A.(BCL)
Banco Sabadell, S.A.
Banco Santander Central Hispano, S.A.
Banco Espanol de Credito, S.A. (Banesto)
Caixa d'Estalvis de Tarragona
Caixa d'Estalvis de Terrassa
Caixa de Aforros de Vigo, Ourense y Pontevedra (Caixanova)
Caja de Ahorros de la Rioja
Caja de Ahorros de Santander y Cantabria
Caja de Ahorros de Vitoria y Alava (Caja Vital)
Caja de Ahorros y Monte de Piedad de Segovia
Caja de Ahorros y Pensiones de Barcelona (La Caixa)
Caja de Ahorros y Monte de Piedad de Madrid (Caja Madrid)
Caja Insular de Ahorros de Canarias
Caja Laboral Popular Coop. de Credito
Caja Rural Intermediterranea , SCC (Cajamar)
Confederación Espanola de Caja de Ahorros (CECA)
Below is a list of banks whose ratings have been downgraded:
Santander Consumer Finance
Below is a list of banks whose ratings have been affirmed:
Banco de Valencia, S.A.
Banco Pastor, S.A.
Banco Popular Espanol, S.A.
Bankinter, S.A.
Bilbao Bizkaia Kutxa
Caixa d'Estalvis de Catalunya (Caixa Catalunya)
Caixa d'Estalvis de Manresa (Caixa Manresa)
Caixa Galicia
Caja de Ahorros de Avila
Caja de Ahorros de Valencia, C y A (Bancaja)
Caja de Ahorros del Mediterraneo
Caja de Ahorros Municipal de Burgos
Caja de Ahorros de Salamanca y Soria (Caja Duero )
Caja Espana de Inversiones
Dexia Sabadell Banco Local, S.A.
Caja de Ahorros y Monte de Piedad de Zaragoza, Aragón y Rioja
(Ibercaja)
Unicaja
ABOUT MOODY'S BANK RATINGS
Bank Financial Strength Rating
Moody's Bank Financial Strength Ratings (BFSRs) represent Moody's opinion
of a bank's intrinsic safety and soundness and, as such, exclude
certain external credit risks and credit support elements that are addressed
by Moody's Bank Deposit Ratings. Bank Financial Strength Ratings
do not take into account the probability that the bank will receive such
external support, nor do they address risks arising from sovereign
actions that may interfere with a bank's ability to honor its domestic
or foreign currency obligations. Factors considered in the assignment
of Bank Financial Strength Ratings include bank-specific elements
such as financial fundamentals, franchise value, and business
and asset diversification. Although Bank Financial Strength Ratings
exclude the external factors specified above, they do take into
account other risk factors in the bank's operating environment,
including the strength and prospective performance of the economy,
as well as the structure and relative fragility of the financial system,
and the quality of banking regulation and supervision.
Global Local Currency Deposit Rating
A deposit rating, as an opinion of relative credit risk, incorporates
the Bank Financial Strength Rating as well as Moody's opinion of any external
support. Specifically, Moody's Bank Deposit Ratings are opinions
of a bank's ability to repay punctually its deposit obligations.
As such, Moody's Global Local Currency Bank Deposit Ratings are
intended to incorporate those aspects of credit risk relevant to the prospective
payment performance of rated banks with respect to local currency deposit
obligations, and includes: intrinsic financial strength and
both implicit and explicit external support elements. Moody's Bank
Deposit Ratings do not take into account the benefit of deposit insurance
schemes which make payments to depositors, but they do recognize
the potential support from schemes that may provide assistance to banks
directly.
Foreign Currency Deposit Rating
Moody's ratings on foreign currency bank obligations derive from the bank's
local currency rating for the same class of obligation. The implementation
of JDA for banks can lead to a high local currency ratings for certain
banks, which could also produce high foreign currency ratings.
Nevertheless, it should be reminded that foreign currency deposit
ratings are in all cases constrained by the country ceiling for foreign
currency bank deposits. This may result in the assignment of a
different, and typically lower, rating for the foreign currency
deposits relative to the bank's rating for local currency obligations.
Foreign Currency Debt Rating
Foreign currency debt ratings are derived from the bank's local currency
debt rating for the same class of obligation. In a similar way
to foreign currency deposit ratings, foreign currency debt obligations
may also be constrained by the country ceiling for foreign currency bonds
and notes, however, in some cases the ratings on foreign currency
debt obligations may be allowed to pierce the foreign currency ceiling.
A particular mix of rating factors are taken into consideration in order
to assess whether a foreign currency bond rating pierces the country ceiling.
They include the issuer's global local currency rating, the foreign
currency government bond rating, the country ceiling for bonds and
the debt's eligibility to pierce that ceiling.
National Scale Rating
National scale ratings are intended primarily for use by domestic investors
and are not comparable to Moody's globally applicable ratings; rather
they address relative credit risk within a given country. An Aaa
rating on Moody's National Scale indicates an issuer or issue with the
strongest creditworthiness and the lowest likelihood of credit loss relative
to other domestic issuers. National Scale Ratings, therefore,
rank domestic issuers relative to each other and not relative to absolute
default risks. National ratings isolate systemic risks; they
do not address loss expectation associated with systemic events that could
affect all issuers, even those that receive the highest ratings
on the National Scale.
London
Antonio Carballo
Managing Director
Financial Institutions Group
Moody's Investors Service Ltd.
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454
Madrid
Maria Cabanyes
Senior Vice President
Financial Institutions Group
Moody's Investors Service Espana, S.A.
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454
Moody's announces bank rating actions for Spain resulting from implementation of JDA and BFSR methodologies
