Madrid, October 24, 2012 -- Moody's Investors Service has today taken various actions on the
ratings of seven Spanish banking groups that are involved in merger processes.
These actions reflect two drivers (1) the confirmation of Spain's
government debt rating, which had previously been on review for
downgrade (see Moody's press release of 16 October 2012 http://www.moodys.com/research/Moodys-confirms-Spains-government-bond-rating-at-Baa3PP-3-assigns--PR_257500);
and (2) enhanced clarity about the relevant merger processes in the cases
of Caixabank/La Caixa, Banco Sabadell and Banco CAM.
This press release discusses the rationale behind the actions on banks
involved in merger processes. Those actions occurred in the context
of broader actions on a total of 31 Spanish banks, discussed in
today's separate release "Moody's concludes rating reviews
on majority of Spanish banks after sovereign rating confirmation").
A third release discusses the rationale behind today's actions on
Liberbank and Ibercaja Banco (see "Moody's downgrades Liberbank
to Ba3, maintains review for downgrade of Ibercaja Banco,
following merger break-up").
A summary of today's actions follows (banks ranked by ratings):
RATING REVIEWS THAT HAVE BEEN RESOLVED
- La Caixa (senior long-term rating Ba2, outlook negative)
- CaixaBank (Baa3 negative, D+/ba1 negative)
- Banco Sabadell, SA (Ba1 negative, D/ba2 negative)
- Banco CAM, SA (Ba1 negative, E+/b3 on review
for upgrade)
BANK RATINGS THAT REMAIN ON REVIEW
- Caja Laboral (Baa3 on review for downgrade, D+/baa3
on review for downgrade)
- Banco Popular Español, SA (Ba1 on review for downgrade,
D/ba2 on review for downgrade)
- Unicaja Banco, SA (Ba1 on review for downgrade, D/ba2
on review for downgrade)
- Banco CEISS (B1 on review, direction uncertain, E+/b2
on review, direction uncertain)
A full list of all affected ratings is available by clicking on this hyperlink
http://www.moodys.com/viewresearchdoc.aspx?docid=PBC_146671.
This list is an integral part of this release.
For additional information on bank ratings, please refer to the
webpage containing Moody's related announcements http://www.moodys.com/eusovereign
RATINGS RATIONALE
BANKS WHOSE RATING REVIEWS HAVE BEEN RESOLVED
The resolution of the rating reviews for the long-term ratings
of Caixabank/La Caixa, Banco Sabadell and Banco CAM reflects Moody's
assessment that (1) downside risks related to the sovereign have diminished;
and (2) sufficient information is available to facilitate a forward-looking
assessment of the creditworthiness of the merged institutions.
--CAIXABANK (Baa3 negative, D+/ba1 negative)
The confirmation of the D+ standalone bank financial strength rating
(BFSR) and ba1 standalone baseline credit assessment (BCA) of Caixabank
reflects Moody's opinion that Caixabank will absorb its acquisition
of Banca Civica without a significant weakening of its credit profile
that would warrant a lower standalone credit assessment for the merged
institution. Banca Civica, which was not publicly rated,
ceased to exist on 3 August 2012. The Baa3 long-term ratings
have also been confirmed, because Moody's assumptions about
support for the merged institution are unchanged from its support assumptions
for Caixabank prior to the merger.
Moody's notes that the increased risk profile of Caixabank following
Banca Civica's acquisition has been largely offset by the significant
balance sheet clean-up at the inception of the merger, thus
aligning the combined entity's risk profile with the stronger risk
profile of Caixabank; the sound evolution of the group during H1
2012 underpins this expectation. Furthermore, Moody's
stated that the remaining integration risks are captured in the ba1 standalone
baseline credit assessment of the new group.
The negative outlook that Moody's has assigned to the standalone
credit assessments and long-term ratings of Caixabank incorporates
the challenges the merged institution faces. Those include the
extremely challenging operating environment, characterized by the
recessionary domestic economy, real estate crisis, very high
unemployment and the broader euro area sovereign and banking crisis.
These conditions will likely lead to further asset quality deterioration
across the banking system and pose risks to the already-fragile
confidence of funding providers.
--LA CAIXA (Ba2, negative)
Moody's has confirmed the Ba2 senior long-term rating of
La Caixa, the holding company of Caixabank. The rating is
closely linked to its main operating entity, Caixabank. Consistent
with the outlook on Caixabank's rating, the outlook on La
Caixa's rating is negative.
--BANCO SABADELL (Ba1 negative, D/ba2 negative)
The confirmation of the D standalone BFSR and ba2 BCA of Banco Sabadell
reflects Moody's opinion that the merger with Banco CAM will result
in a merged institution with similar standalone credit strength to Banco
Sabadell's existing profile. The Ba1 senior long-term
rating and all other debt and deposit ratings have also been confirmed
as Moody's support assumptions for the merged institutions are unchanged
from Moody's support assumptions for Banco Sabadell.
Although Moody's acknowledges the very weak credit profile of Banco
CAM (as reflected by its b3 standalone credit assessment), the rating
agency notes that the incremental risk profile for the combined group
is largely offset by the broad public support package that was committed
at the time of the acquisition. Banco CAM's fragile risk
absorption capacity will be compensated by an Asset Protection Scheme
funded by the Deposit Guarantee Fund (FGD), which covers the bulk
of the bank's exposure to toxic assets (80% of a predominantly
real-estate portfolio of EUR24.6 billion) and a EUR5.2
billion capital injection made by the FGD.
Moody's has assigned a negative outlook to the standalone credit
assessment and long-term ratings of Banco Sabadell. The
negative outlooks reflect the broader challenges facing Spanish banks
and the execution risks of the merger.
--BANCO CAM (Ba1 negative, E+/b3 on review for
upgrade)
The E+ standalone BFSR and b3 BCA of Banco CAM reflect its very weak
standalone credit profile. It has been placed on review for upgrade
to reflect the positive implications of integrating into a stronger bank.
Moody's expects to withdraw the standalone credit assessment and
issuer ratings of Banco CAM, as the entity will cease to exist upon
completion of the merger transaction, which is expected to be effective
on 8 December 2012. As a result of the completion of the merger,
the deposit and debt obligations of Banco CAM will be assumed by Banco
Sabadell.
Banco CAM's Ba1 senior long-term rating and all its other
long-term ratings have been confirmed. These ratings reflect
Moody's assumptions about strong parental support from Banco Sabadell
given the advanced status of the merger. Moody's has assigned
a negative outlook on the long-term ratings of Banco CAM,
in line with its parent Banco Sabadell.
BANKS WHOSE RATINGS REMAIN ON REVIEW
--CAJA LABORAL (Baa3 on review for downgrade, D+/baa3
on review for downgrade)
Moody's maintains on review for downgrade the D+ standalone
BFSR and its baa3 BCA of Caja Laboral. The ongoing review reflects
the possibility that, following the completion of its merger agreement
with Ipar Kutxa Rural, SCC (not publicly rated), the merged
institution will have a weaker credit profile than Caja Laboral.
A weaker credit profile could result from the combination of recent weakening
in Caja Laboral's asset performance, new risk elements added
by the merger with Ipar Kutxa and the execution risks involved in any
merger. Moody's expects to conclude the review process shortly
after it has sufficient visibility on the most relevant execution details
of the merger.
The Baa3 senior long-term ratings of Caja Laboral also remain on
review for downgrade, reflecting the review status of the standalone
credit profile.
--BANCO POPULAR ESPAÑOL (Ba1 on review for downgrade,
D/ba2 on review for downgrade)
Moody's maintains on review for downgrade the D standalone BFSR
and its ba2 BCA of Banco Popular Español SA (Banco Popular).
Moody's says that it will conclude the current assessment of Banco Popular's
merger with Banco Pastor once there is more certainty about the materialization
of the different capital strengthening initiatives that Banco Popular
is implementing to reinforce its risk-absorption capacity.
Driven by the large capital needs revealed by Oliver Wyman's stress
test exercise for the combined entity, Banco Popular has accelerated
its re-capitalitalization plan which now hinges on a € 2.5
billion rights issue that the bank expects to conduct shortly.
Moody's notes that the bank's standalone profile could come
under significant pressure if it fails to meet capital shortfall from
private internal or external means.
The Ba1 senior long-term ratings of Banco Popular also remain on
review for downgrade, reflecting the review status of the standalone
credit profile.
--UNICAJA BANCO (Ba1 on review for downgrade, D/ba2
on review for downgrade)
Moody's maintains on review for downgrade the D standalone BFSR
and its ba2 BCA of Unicaja Banco (Unicaja). The ongoing review
reflects some remaining uncertainty about the completion of the merger
with Banco CEISS, as well as the possibility that the merged institution
will have a weaker credit profile than Unicaja. Moody's expects
to conclude the review process shortly after the rating agency will have
more clarity on the effective materialization of the merger as well as
on the details of the integration plan.
The Ba1 senior long-term ratings of Unicaja also remain on review
for downgrade, reflecting the review status of the standalone credit
profile.
--BANCO CEISS (B1 on review, direction uncertain,
E+/b2 on review, direction uncertain)
Moody´s maintains on review with direction uncertain the E+
standalone BFSR and its b2 BCA of Banco CEISS, reflecting the likelihood
that the rating of the resultant combined entity might be higher than
its current ratings or lower in the event that the merger process fails
to succeed. Moody's expects to conclude the review for Banco
CEISS in line with the conclusion of the review of Unicaja.
The B1 senior long-term ratings of Banco CEISS also remain on review
with direction uncertain, reflecting the review status of the standalone
credit profile.
WHAT COULD MOVE THE RATINGS UP/DOWN
Downwards pressure on the banks' ratings might develop if operating conditions
worsen beyond Moody's current expectations, i.e. a
broader economic recession beyond our current GDP decline forecasts of
-1.7% for 2012 and -1% for 2013;
especially given that this is likely to result in asset-quality
deterioration exceeding Moody's current expectations; and/or if pressures
on market-funding intensify.
Upwards pressure on the ratings may arise upon the implementation of the
government's plan to stabilise the banking system, to the extent
that the banks' resilience to the challenging prevailing conditions improves.
Likewise, any improvement in the standalone strength of banks arising
from stronger earnings, improved funding conditions or the resolution
of problem assets could result in rating upgrades.
RESEARCH REFERENCES
- Moody's confirms Spain's government bond rating at Baa3/(P)P-3,
assigns negative outlook (http://www.moodys.com/research/Moodys-confirms-Spains-government-bond-rating-at-Baa3PP-3-assigns--PR_257500),
16 Oct 2012
- Moody's takes actions on 4 Spanish banking groups due to
restructuring framework (http://www.moodys.com/research/Moodys-takes-actions-on-4-Spanish-banking-groups-due-to--PR_255526),
5 Oct 2012
- Sector Comment: Spanish Banks' Upcoming Recapitalization
Is Credit Positive, but May Be Insufficient (http://www.moodys.com/research/Spanish-Banks-Upcoming-Recapitalization-Is-Credit-Positive-but-May-Be--PBC_145834),
1 Oct 2012
- Banking System Outlook: Spain (http://www.moodys.com/research/Banking-System-Outlook-Spain--PBC_144617),
17 Aug 2012
- Moody's downgrades Spanish banks (http://www.moodys.com/research/Moodys-downgrades-Spanish-banks--PR_249316),
25 Jun 2012
- How Sovereign Credit Quality May Affect Other Ratings (http://www.moodys.com/research/How-Sovereign-Credit-Quality-May-Affect-Other-Ratings--PBC_139495),
13 Feb 2012
- Moody's to assign backed Aaa ratings to new euro-denominated
long-term debt securities covered by Spanish government's guarantee
(http://www.moodys.com/research/Moodys-to-assign-backed-Aaa-ratings-to-new-euro-denominated--PR_171216),
22 January 2009
PRINCIPAL METHODOLOGY
The principal methodology used in these ratings was Moody's Consolidated
Global Bank Rating Methodology published in June 2012. 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 relevant 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 relevant 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 relevant 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.
The ratings have been disclosed to the rated entities or their designated
agent(s) and issued with no amendment resulting from that disclosure.
Information sources used to prepare each of the ratings are the following:
parties involved in the ratings, public information, and confidential
and proprietary Moody's Investors Service information.
Moody's considers the quality of information available on the rated entities,
obligations or credits satisfactory for the purposes of issuing these
ratings
Moody's adopts all necessary measures so that the information it uses
in assigning the ratings 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.
Moody's Investors Service may have provided Ancillary or Other Permissible
Service(s) to the rated entities or their related third parties within
the two years preceding the credit rating action. Please see the
special report "Ancillary or other permissible services provided
to entities rated by MIS's EU credit rating agencies" on the
ratings disclosure page on our website www.moodys.com for
further information.
Please see the ratings disclosure page on www.moodys.com
for general disclosure on potential conflicts of interests.
Please see the ratings disclosure page on www.moodys.com
for information on (A) MCO's major shareholders (above 5%)
and for (B) further information regarding certain affiliations that may
exist between directors of MCO and rated entities as well as (C) the names
of entities that hold ratings from MIS that have also publicly reported
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A member of the board of directors of this rated entity may also be a
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however, Moody's has not independently verified this matter.
Please see Moody's Rating Symbols and Definitions on the Rating
Process page on www.moodys.com for further information on
the meaning of each rating category and the definition of default and
recovery.
Please see ratings tab on the issuer/entity page on www.moodys.com
for the last rating action and the rating history. The date on
which some ratings were first released goes back to a time before Moody's
ratings were fully digitized and accurate data may not be available.
Consequently, Moody's provides a date that it believes is
the most reliable and accurate based on the information that is available
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for further information.
The below contact information is provided for information purposes only.
Please see the issuer page on www.moodys.com for Moody's
regulatory disclosure of the name of the lead analyst and the office that
has issued the credit rating.
Maria?Cabanyes
Senior Vice President
Financial Institutions Group
Moody's Investors Service Espana, S.A.
Calle Principe de Vergara, 131, 6 Planta
Madrid 28002
Spain
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454
Johannes Wassenberg
MD - Banking
Financial Institutions Group
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454
Releasing Office:
Moody's Investors Service Espana, S.A.
Calle Principe de Vergara, 131, 6 Planta
Madrid 28002
Spain
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454
Moody's confirms ratings of Caixabank, La Caixa, Banco Sabadell and Banco CAM, maintains other banks on review
