Madrid, December 19, 2011 -- Moody's Investors Service has today downgraded to A3/Prime2 from
A2/Prime1 the long- and short-term deposit ratings of Bankoa
S.A., following Moody's rating downgrade on
its parent Credit Agricole S.A. (CASA) on 9 December 2011.
Bankoa's long-term deposit ratings remain under review for
further downgrade.
Concurrently, Moody's also placed on review for downgrade
Bankoa's C- BFSR -- currently mapping to Baa2 on the
long-term rating scale.
RATINGS RATIONALE
DEPOSIT RATINGS
Although not included in the group internal solidarity mechanism,
Bankoa is integrated into the Groupe Credit Agricole, as it is jointly
owned by the Caisse Regionale de Credit Agricole Pyrenees Gascogne and
CASA.
Moody's said that the driver for the downgrade of Bankoa's
deposit ratings was the downgrade of CASA's standalone bank financial
strength rating (BFSR) to C- (corresponding to Baa2 on the long-term
rating scale), on 9 December 2011, reflecting the rating agency's
view that CASA's prior credit-positive factors (strong domestic
retail banking franchise, good diversification, stable earnings)
are now offset by liquidity and funding constraints.
Prior to today's rating action, Bankoa's deposit ratings
benefitted from a three-notch uplift from parental support from
its Baa2 standalone credit strength (mapped from its BFSR). The
bank's parental support has been lowered to two notches to reflect
CASA's weakened credit strength, which Moody's believes
results in lower capacity to support Bankoa. Bankoa's deposit
ratings do not benefit from systemic support.
In addition, Bankoa's long-term deposit ratings remain
on review for further downgrade in light of the two following factors:
(i) The diminution of the financial strength of CASA, which may
have negative implications in terms of the willingness of the parent company
to provide support to its subsidiaries, including Bankoa.
Moody's will therefore reassess its consideration of a very high
probability of support from CASA to Bankoa in the case of financial need.
Moody's review will focus on the strategic fit of Bankoa within
the group, in light of CASA's potential strategic refocus
on its domestic franchises.
(ii) The review for downgrade of Bankoa's BFSR
BANK FINANCIAL STRENGHT RATING
The review of Bankoa's BFSR stems from the bank's funding
structure, which is highly dependent on the parent's ongoing
liquidity support. During the review period, Moody's
will focus on the sustainability of such liquidity support, together
with the bank's capacity to replace funding from the parent with
alternative funding sources.
WHAT COULD CHANGE THE RATING UP/DOWN
An upgrade of Bankoa's ratings is unlikely in the near future,
given the current review for downgrade on its ratings.
However, upward pressure could be exerted on Bankoa's BFSR
as a result of: (i) an improvement in the level of recurring risk-adjusted
profitability; or (ii) a strengthening of the bank's franchise
value through significantly increased market shares, as long as
these changes do not result in a higher risk profile. A more balanced
funding profile with lower reliance on parent funding would also be a
prerequisite for an improvement in Bankoa's standalone rating.
Downward pressure could be exerted on Bankoa's BFSR as a result
of any of the following: (i) portfolio losses exceeding Moody's
current stress scenarios; or (ii) the bank's risk absorption
capacity -- primarily composed of capital and reserves -- weakening
beyond that which is envisaged in Moody's stress tests. A
deterioration in Bankoa's franchise and/or an increase in its risk
profile would also exert negative pressure on its ratings.
Bankoa's long-term deposit ratings could potentially be downgraded
if the bank's credit profile deteriorates further, leading
to a downgrade of its BFSR; if Moody's considers that the probability
of parental support has declined; or if there is a further downgrade
of CASA's ratings.
The methodologies used in this rating were Bank Financial Strength Ratings:
Global Methodology published in February 2007, and Incorporation
of Joint-Default Analysis into Moody's Bank Ratings: A Refined
Methodology published in March 2007. Please see the Credit Policy
page on www.moodys.com for a copy of these methodologies.
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 rating has been disclosed to the rated entity or its designated agent(s)
and issued with no amendment resulting from that disclosure.
Information sources used to prepare the rating 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
entity, obligation or credit satisfactory for the purposes of issuing
a rating.
Moody's adopts all necessary measures so that the information it
uses in assigning a 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 rating process.
Moody's Investors Service may have provided Ancillary or Other Permissible
Service(s) to the rated entity or its related third parties within the
two years preceding the credit rating action. Please see the special
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page on our website www.moodys.com for further information.
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for information on (A) MCO's major shareholders (above 5%) and
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between directors of MCO and rated entities as well as (C) the names of
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Please see Moody's Rating Symbols and Definitions on the Rating Process
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for the last rating action and the rating history.
The date on which some ratings were first released goes back to a time
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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.
Alberto Postigo
Vice President - Senior Analyst
Financial Institutions Group
Moody's Investors Service Espana, S.A.
Calle Principe de Vergara, 131, 6 Planta
Madrid 28002
Spain
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Johannes Wassenberg
MD - Banking
Financial Institutions Group
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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
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Moody's downgrades Bankoa to A3; ratings remain on review for further downgrade
