Moodys.com
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
Close
Email Research
Thank you for your interest in sharing Moody's Research. You have reached the daily limit of Research email sharings.
Close
Thank you!
You have successfully sent the research.
Please note: some research requires a paid subscription in order to access.
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”, 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 information that becomes accessible to you (the “Information”). References herein to “Moody’s” include Moody’s Corporation. and each of its subsidiaries and affiliates..

 

Terms of One-Time Website Use

 

1.             Unless you have entered into an express written contract with www.moodys.com to the contrary and/or agreed to the Terms of Use at www.moodys.com or ratings.moodys.com, 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.             CREDIT RATINGS AND MOODY’S MATERIALS FOUND ON WWW.MOODYS.COM OR SITES OTHER THAN RATINGS.MOODYS.COM MAY NOT BE DISPLAYED IN REAL TIME. FOR REAL-TIME DISPLAYS OF CREDIT RATINGS AND OTHER INFORMATION REQUIRED TO BE DISCLOSED BY MIS PURSUANT TO APPLICABLE LAW OR REGULATION, PLEASE USE RATINGS.MOODYS.COM.           

 

3.             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.

 

4.             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.     

 

5.             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.​​​

 

6.             You agree that any disputes relating to this agreement or your use of the Information, whether 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 assigns long-term deposit ratings of Baa3 to Bigbank AS; outlook stable

01 Jul 2022

Stockholm, July 01, 2022 -- Moody's Investors Service ("Moody's") has assigned Baa3 long-term and Prime-3 short-term foreign and local currency bank deposit ratings to Bigbank AS (Bigbank) in Estonia. The assigned long-term deposit ratings carry a stable outlook.

Moody's also assigned a Baseline Credit Assessment (BCA) and Adjusted BCA of ba1, a Baa1(cr) long-term and P-2(cr) short-term Counterparty Risk (CR) Assessment, and Baa1 long-term and P-2 short-term foreign and local currency Counterparty Risk Ratings (CRRs).

The ratings reflect Bigbank's robust capitalisation coupled with strong profitability, and retail focused deposit funding.

These strengths are balanced against Moody's expectation of continued very high loan growth, the bank's high risk-appetite in both lending and direct investments, and the key-person risk, reflecting the two founders and co-owners which are heavily involved in the operations of the bank.

A full list of affected ratings can be found at the end of the press release.

RATINGS RATIONALE

BASELINE CREDIT ASSESSMENT

The deposit ratings of Baa3/Prime-3 reflect standalone credit characteristics of Bigbank as a fast growing lender to Baltic households and small and medium-sized enterprises, which translates into a BCA of ba1, together with a one-notch rating uplift which captures the low loss level faced by junior depositors under Moody's Advanced Loss Given Failure (LGF) analysis.

The bank's standalone fundamentals are strong, but aggressive growth over the past three years, with a 53% growth in gross loans in 2021, creates key credit challenges, including operational risks and the unseasoned nature of the loan book, in a weak macro-economic environment. High levels of capital and strong internal capital generation are among the bank's key strengths, supporting the bank's strategy to scale up its franchise.

However, Moody's expects the bank's capitalization, in the form of tangible common equity-to-risk-weighted assets (TCE/RWA) ratio to decline by around 150 basis points by year-end 2022 from 16.0% as of end-March 2022. This reflects the bank's very high expected loan growth, with the bank planning to add 25% to 50% to the balance sheet on a yearly basis. Despite this, the ratio still compares well with the bank's Baltic peers.

The bank's solid profitability is evidenced by a net income-to-tangible assets ratio of 3.2% in 2021, increasing from 2.9% a year-earlier. Despite the elevated loan loss provisions booked in 2021 and the decline in net interest margin, the net income rose, as a result of the growing business volumes and slightly improved efficiency. We expect Bigbank's profitability to remain strong although likely to decline as the bank diversifies its lending to segments with lower risks and lower margins. The bank will also be faced with potentially higher costs and provisioning needs resulting from the higher inflation in the bank's operating domains.

Bigbank is largely deposit funded, with deposits making up 93% of total liabilities at the end of 2021.  Almost all deposits, 98%, are sourced from individuals and are protected under the Estonian deposit guarantee scheme, but a large share is sourced outside the Baltic countries; including in Germany and the Netherlands. Although the bank has a good franchise and gathers deposits directly from retail clients, with 62% being term deposits and 48% having a remaining maturity of 6 months or more as of end of 2021,  Moody's considers cross-country deposits to be more volatile than locally sourced deposits. Due to the inherently more volatile nature of cross-border deposits, there is a risk that the bank's funding costs could increase in case of market volatility or a weakening of the bank's franchise or reputation.

With a liquid banking assets-to-tangible banking assets ratio of 13.5% as of end-March 2022, and relatively short tenors on its lending the bank has adequate volumes of liquid assets to cover the fluctuations in deposit flows.

Corporate governance is highly relevant for Bigbank. Bigbank's ba1 BCA incorporates two negative corporate behavior adjustments. One adjustment reflects the elevated risk appetite as exhibited by the bank's growth strategy and direct investments, leaving Bigbank exposed to potentially adverse developments in asset quality; with a second adjustment reflecting the key-person risk, given the bank's reliance on its two co-owners, who are heavily involved in the operations of the bank.

           

LOSS GIVEN FAILURE

Moody's applies the Advanced LGF analysis to Bigbank as the bank is subject to the European Union Bank Resolution and Recovery Directive (BRRD), which Moody's considers to be an operational resolution regime. In a bail-in scenario, the bank's junior deposits are likely to face a low loss given failure, owing to the buffer provided by the volumes of loss absorbing obligations, including junior deposits. As a result, Bigbank's deposits are rated one notch above the ba1 Adjusted BCA. The long-term CR Assessment is positioned at Baa1(cr), and the long-term CRRs are placed at Baa1, three notches above the Adjusted BCA of ba1 as indicated by LGF.

GOVERNMENT SUPPORT

The ratings reflect a low assumption of government support resulting in no uplift. This reflects the small market share of 3% of lending in Estonia. Moody's considers that the bank's lack of systemic importance does not justify any explicit rating uplift from government support.

OUTLOOK

The long-term bank deposit ratings carry a stable outlook, reflecting the fact that over the next 12-18 months the bank will continue growing its loan book rapidly leading to lower capitalisation and heightened asset risk, but that the bank will manage these challenges.

FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS

Factors that could lead to an upgrade include: 1) a more gradual loan growth while maintaining or lowering the problem loan ratio, signaling a less aggressive growth strategy; 2) a more granular ownership and a reduction of key-person risk; 3) a higher volume of junior deposits or issuances of senior unsecured debt which would increase the volumes of loss absorbing obligations.

Factors that could lead to a downgrade include: 1) continued fast growth leading to deterioration in capital levels beyond Moody's expectations and buildup of additional asset risk including rapid increase in problem loans; 2) significant deteriorating levels of profitability; 3) loss of confidence from international depositors; or 4) lower levels of subordinated debt, which lead to lower levels of loss absorbing obligations, increasing loss rates for depositors in case of failure.

LIST OF AFFECTED RATINGS

..Issuer: Bigbank AS

Assignments:

....Baseline Credit Assessment, Assigned ba1

....Adjusted Baseline Credit Assessment, Assigned ba1

....Long-term Counterparty Risk Assessment, Assigned Baa1(cr)

....Short-term Counterparty Risk Assessment, Assigned P-2(cr)

....Long-term Counterparty Risk Ratings, Assigned Baa1

....Short-term Counterparty Risk Ratings, Assigned P-2

....Long-term Bank Deposit Ratings, Assigned Baa3, Outlook Assigned Stable

....Short-term Bank Deposit Ratings, Assigned P-3

Outlook Action:

....Outlook, Assigned Stable

PRINCIPAL METHODOLOGY

The principal methodology used in these ratings was Banks Methodology published in July 2021 and available at https://ratings.moodys.com/api/rmc-documents/71997. Alternatively, please see the Rating Methodologies page on https://ratings.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 on https://ratings.moodys.com/rating-definitions.

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 issuer/deal page for the respective issuer on https://ratings.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 https://ratings.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://ratings.moodys.com/documents/PBC_1288235.

At least one ESG consideration was material to the credit rating action(s) announced and described above.

The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody's affiliates outside the UK and is endorsed by Moody's Investors Service Limited, One Canada Square, Canary Wharf, London E14 5FA under the law applicable to credit rating agencies in the UK. Further information on the UK endorsement status and on the Moody's office that issued the credit rating is available on https://ratings.moodys.com.

Please see https://ratings.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 issuer/deal page on https://ratings.moodys.com for additional regulatory disclosures for each credit rating.

Mattias Eric Frithiof
Asst Vice President - Analyst
Financial Institutions Group
Moody's Investors Service (Nordics) AB
Norrlandsgatan 20
Stockholm, 111 43
Sweden
JOURNALISTS: 44 20 7772 5456
Client Service: 44 20 7772 5454

Simon Ainsworth
Associate Managing Director
Financial Institutions Group
JOURNALISTS: 44 20 7772 5456
Client Service: 44 20 7772 5454

Releasing Office:
Moody's Investors Service (Nordics) AB
Norrlandsgatan 20
Stockholm, 111 43
Sweden
JOURNALISTS: 44 20 7772 5456
Client Service: 44 20 7772 5454

No Related Data.
© 2023 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 credit 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, Inc. 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 — Charter Documents - 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 JPY100,000 to approximately JPY550,000,000.

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

Moodys.com