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Rating Action:

Moody's downgrades German banks' subordinated debt

17 Feb 2011

Approximately EUR24 billion of subordinated debt affected

New York, February 17, 2011 -- Moody's Investors Service has today downgraded the ratings of 248 subordinated debt securities, together with the subordinated tranches of the relevant debt programs issued or guaranteed by 23 German banks and one Irish subsidiary of a German bank. This follows the introduction of the German Bank Restructuring Act, which in Moody's opinion increases the risk of losses being imposed on subordinated debt outside of liquidation. Moody's has therefore decided to link the subordinated debt ratings for Lower Tier 2 and Tier 3 securities closer to the stand-alone financial strength of the issuers by withdrawing its assumption of systemic and regional government support for subordinated bank debt. The exceptions to this are the ratings of the subordinated debt issued by Bayerische Landesbank and Sparkasse KoelnBonn, for which Moody's has decided to remove all systemic support, while maintaining some degree of regional government support because of high regional-government ownership stakes.

The removal of regional government and systemic support from the subordinated debt ratings triggered by the new German Bank Restructuring Act has resulted in average downgrades of two and a half notches and a maximum change of seven notches. A detailed list of the affected ratings is available at the end of the press release and on Moody's website, which may be accessed here http://v3.moodys.com/viewresearchdoc.aspx?docid=PBC_131308

Today's rating action concludes Moody's review for possible downgrade of German banks' Lower Tier 2 ratings initiated on 16 December 2010. These rating actions have no impact on the ratings of the affected banks' senior debt, grandfathered debt or hybrid debt ratings.

For more information on Moody's assessment of the German Bank Restructuring Act, see the special comment "German Bank Restructuring Act Reduces Systemic Support for Subordinated debt-holders" which is available on moodys.com and may be accessed here http://v3.moodys.com/viewresearchdoc.aspx?docid=PBC_131128

RATINGS RATIONALE

"The new law allows for broader burden-sharing in a distress scenario with implications potentially for both senior and subordinated debt. However, Moody's considers subordinated debt to be most at risk under the new law and has therefore adjusted its ratings accordingly," says Mathias Kuelpmann, Senior Vice President at Moody's in Frankfurt.

According to the Bank Restructuring Act, it will now be possible to (i) impose losses on debt-holders of a going-concern entity under a reorganisation "bail-in" plan; or (ii) separate classes of debt into 'going concern' and 'gone concern' legal entities. Previously, debt was likely to suffer permanent losses only in the scenario of the liquidation of a bank . The new regulatory tools allow authorities to impose losses on debt-holders without necessarily placing the entire bank into liquidation.

With these tools available, the rating agency believes that government support -- including support from public-sector owners -- for subordinated debt instruments has become far less certain than in the past, given its characteristic as regulatory capital and its reduced systemic importance as an asset class. Accordingly, the reduction of support assumptions for subordinated debt is necessary to better align these ratings with the stand-alone financial strength of the issuer versus the financial capacity of the regional or systemic support providers. To reflect the higher immediate risk arising for subordinated debt from the more flexible bank resolution regime introduced by the Bank Restructuring Act, Moody's has changed the anchor for subordinated debt from the Bank Deposit Rating to the Adjusted Baseline Credit Assessment (Adjusted BCA), which is an assessment of the issuer's financial strength and the existing anchor for all hybrid ratings. The Adjusted BCA results from adding any parental support and co-operative support (where applicable) to a bank's Baseline Credit Assessment (BCA) and excludes systemic and regional government support.

The regulatory tools provided by the Bank Restructuring Act are broad enough to allow the imposition of losses on senior unsecured and subordinated bondholders. Moody's immediate focus is on subordinated debt which, in its estimation, is unlikely to benefit from German government support in future. For senior debt, losses are unlikely to be imposed at present because (i) in the current market environment, there is a possibility that haircuts on senior unsecured debt would severely disrupt the financial markets; and (ii) there is a consequent absence of any clear consensus in Germany (and in other jurisdictions) on the feasibility of imposing losses on senior unsecured creditors at systemically important institutions. However, Moody's will continue to monitor relevant developments -- such as the recent EU proposal for a unified framework of bank resolution regimes -- in order to anticipate any developing consensus in Germany on the implications of reduced systemic support for bank funding and financial stability and on the potential for losses to be imposed across the entire credit hierarchy, up to senior debt.

Following the downgrades announced today, subordinated bank debt ratings in Germany are positioned one notch below the anchor Adjusted BCA, apart from two exceptions, Bayerische Landesbank and Sparkasse KoelnBonn. These two banks maintain some degree of regional government support as detailed further below. The approach taken is in line with the methodology "Moody's Guidelines for Rating Hybrid Securities and Subordinated Debt", published in November 2009.

Following the downgrade of the program rating of WestLB's subordinated debt to (P)B1 from (P)A2, Moody's has withdrawn the program rating of WestLB's subordinated debt for business reasons as no outstanding debt under this particular program is currently rated by Moody's. Please refer to Moody's Investors Service's Withdrawal Policy, which can be found on our website, www.moodys.com.

REGIONAL GOVERNMENT SUPPORT

Regarding regional government support, Moody's continues to acknowledge both the position of regional governments as partial owners -- in particular in the case of the Landesbanken -- and the importance of these banks as major credit providers in their respective region. "Despite this, we have removed regional government support uplift for the subordinated debt ratings as this can no longer be taken for granted for this type of debt under the new Bank Restructuring Act," says Mathias Kuelpmann. "We also believe that, in cases of repeated distress in the Landesbanken sector, the central government may exert heightened pressure to downsize and consolidate, making the situation less predictable for subordinated debt given the new tools available under the act," adds Mr Kuelpmann.

However, Moody's has decided to recognise two specific cases where some regional support remains included in the newly positioned subordinated debt ratings:

For Bayerische Landesbank, Moody's downgraded the subordinated debt to Baa3 from A2, which continues to include some regional government support. Moody's decision is underpinned by (i) the high amount of capital provided during the financial crisis, including a €10 billion equity injection; and (ii) the high 94% stake that the regional government of Bavaria (rated Aaa) owns in the bank. The €10 billion capital injection has led the rating agency to believe that the regional government will provide further support in case of need, in order to protect that region's recent investment in the bank. At the same time, the regional government has stated its intent to divest part of its stakes over time and hence Moody's has decided to include only partial regional government support. Moody's will reconsider its support assumptions for subordinated debt ratings once the plans to divest become more concrete.

For Sparkasse KoelnBonn, Moody's decided to fully include local government support in the bank's subordinated debt rating. Moody's considers that a savings bank's break-up or unwinding as result of a transfer order is not an option. Sparkasse KoelnBonn is 100% owned by the Cities of Cologne and Bonn with ownership not being transferable outside of the public sector. "Given the strong cohesion of the savings bank sector -- and with the municipalities being members of the regional savings bank associations -- we believe a solution, if ever needed, would be found within the savings bank sector," explains Mathias Kuelpmann.

SELECT CHANGES IN ADJUSTED STAND-ALONE RATINGS (Adjusted BCAs)

Moody's has changed the support assumptions for Bayerische Landesbank, increasing its expectation of regional government support to very high from high, while decreasing cooperative support to moderate from high. These support assumptions better reflect the bank's increased ownership by the Free State of Bavaria after its capital injection during the financial crisis. Over the same period, the local savings bank association reduced its share to 6% from 50%. As a result, the A1 long-term debt and deposit rating of the bank remains unchanged, but the eight notches of uplift from the Ba3 Baseline Credit Assessment (BCA) now includes only two notches of rating uplift for cooperative support, moving the Adjusted BCA one notch lower to Ba1 from Baa3. The A1 senior debt rating also includes three notches for regional government support and another three notches for systemic support.

The Adjusted BCA for Deutsche Postbank includes two notches of parental support, as Moody's expects Deutsche Bank to exercise control over Deutsche Postbank. However, the ratings of Deutsche Postbank's hybrid securities continue to exclude parental support, but have a positive outlook. As stated in Moody's press release of 1 December 2010 affirming the A1/D+ ratings of Deutsche Postbank AG, Moody's expects to include parental support for hybrid securities once Deutsche Bank demonstrates its commitment further by establishing a profit-and-loss transfer agreement.

The Adjusted BCA for UniCredit Bank AG is Baa1, which is also the anchor for the bank's hybrid securities. The Adjusted BCA of Baa1 represents a correction of the information in Moody's press release of 16 December 2010.

OUTLOOK ON SUBORDINATED DEBT HAS CHANGED FOR SOME BANKS AS IT NOW FOLLOWS THE OUTLOOK ON THE BANK FINANCIAL STRENGTH RATINGS (BFSRs)

Since Moody's is using the Adjusted BCA as the new anchor for subordinated debt, the outlooks for the subordinated debt ratings have changed in several instances to reflect the outlooks for the stand-alone bank financial strength ratings, which map to the BCA used in determining the Adjusted BCA. Previously, the subordinated debt outlooks were determined by the outlooks for a bank's long-term debt and deposit ratings, which were previously the anchor for subordinated debt ratings.

The principal methodologies used in this rating were Bank Financial Strength Ratings: Global Methodology published in February 2007, Incorporation of Joint Default Analysis into Moody's Bank Ratings: A Refined Methodology published in March 2007, and Moody's Guidelines for Rating Bank Hybrid Securities and Subordinated Debt published in November 2009.

DETAILED LIST OF RATING ACTIONS

Please find below the list of rating actions for the 24 banks affected. In the following section, subordinated debt typically describes Lower Tier 2 securities. Rating changes on Tier 3 are listed separately if rated by Moody's.

The subordinated debt rating of Bayerische Landesbank (BayernLB) was downgraded to Baa3 from A2, moving the rating to one notch above the bank's Adjusted BCA of Ba1, because it includes two notches of regional government support. The outlook is stable, in line with the outlook on the BFSR.

The subordinated debt rating of Bremer Landesbank was downgraded to A3 from Aa3, moving the rating to one notch below the bank's Adjusted BCA of A2. The outlook is negative, in line with the outlook on the BFSR.

The subordinated debt rating of Commerzbank AG (Commerzbank) was downgraded to Baa2 from A1 and remains on review for downgrade following Moody's announcement on Commerzbank group of February 17. This rating applies to both Lower Tier 2 and Tier 3 securities.

The subordinated debt rating of DekaBank Deutsche Girozentrale (DekaBank) was downgraded to A3 from Aa3, moving the rating to one notch below the bank's Adjusted BCA of A2. The outlook is stable, in line with the outlook on the BFSR.

The subordinated debt rating of DEPFA Bank plc was downgraded to B3 from Ba1, moving the rating to one notch below the bank's Adjusted BCA of B2. The outlook is stable, in line with the outlook on the BFSR.

The subordinated debt rating of Deutsche Apotheker- und Aerztebank eG (apoBank) was downgraded to Baa2 from A3, moving the rating to one notch below the bank's Adjusted BCA of Baa1. The outlook is negative, in line with the outlook on the BFSR.

The subordinated debt rating of Deutsche Bank AG was downgraded to A3 from A1, moving the rating to one notch below the bank's Adjusted BCA of A2. The outlook is stable, in line with the outlook on the BFSR. This rating applies to both Lower Tier 2 and Tier 3 securities.

The subordinated debt rating of Deutsche Hypothekenbank was downgraded to Baa1 from A2, moving the rating to one notch below the bank's Adjusted BCA of A3. The outlook is negative, in line with the outlook on the BFSR.

The subordinated debt rating of Deutsche Pfandbriefbank AG was downgraded to B2 from Baa1, moving the rating to one notch below the bank's Adjusted BCA of B1. The outlook is positive, in line with the outlook on the BFSR.

The subordinated debt rating of Deutsche Postbank AG was downgraded to Baa2 from A2, moving the rating to one notch below the bank's Adjusted BCA of Baa1. The outlook is negative, in line with the outlook on the BFSR.

The subordinated debt rating of DVB Bank S.E. was downgraded to A3 from A2, moving the rating to one notch below the bank's Adjusted BCA of A2. The outlook is negative, in line with the outlook on the BFSR.

The subordinated debt rating of DZ Bank was downgraded to A3 from A1, moving the rating to one notch below the bank's Adjusted BCA of A2. The outlook is stable, in line with the outlook on the BFSR.

The subordinated debt rating of Eurohypo AG (Eurohypo) was downgraded to Ba1 from A2 and remains on review for downgrade following Moody's announcement on Commerzbank group of February 17. This rating applies to both Lower Tier 2 and Tier 3 securities. Regarding Tier 3 instruments, this is a correction of the Ba2 rating mentioned in Moody's Press Release earlier today.

The subordinated debt rating of HSH Nordbank was downgraded to Ba3 from Baa1, moving the rating to one notch below the bank's Adjusted BCA of Ba2. The outlook is developing, in line with the outlook on the BFSR.

The subordinated debt rating of IKB Deutsche Industriebank AG was downgraded to Caa2 from Ba2, moving the rating to one notch below the bank's Adjusted BCA of Caa1. The outlook is stable, in line with the outlook on the BFSR.

The subordinated debt rating of Landesbank Baden-Wuerttemberg (LBBW) was downgraded to Baa1 from Aa3, moving the rating to one notch below the bank's Adjusted BCA of A3. The outlook is negative, in line with the outlook on the BFSR.

The subordinated debt rating of Landesbank Berlin AG was downgraded to Baa2 from A2, moving the rating to one notch below the bank's Adjusted BCA of Baa1. The outlook is stable, in line with the outlook on the BFSR.

The subordinated debt rating of Landesbank Hessen-Thueringen GZ was downgraded to Baa1 from Aa3, moving the rating to one notch below the bank's Adjusted BCA of A3. The outlook is stable, in line with the outlook on the BFSR.

The subordinated debt rating of Muenchener Hypothekenbank eG was downgraded to A3 from A2, moving the rating to one notch below the bank's Adjusted BCA of A2. The outlook is negative, in line with the outlook on the BFSR.

The subordinated debt rating of Norddeutsche Landesbank GZ was downgraded to A3 from Aa3, moving the rating to one notch below the bank's Adjusted BCA of A2. The outlook is negative, in line with the outlook on the BFSR.

The subordinated debt rating of Sparkasse KoelnBonn was downgraded to Baa2 from A2, moving the rating to one notch above the bank's Adjusted BCA of Baa3 because it includes two notches of regional government support. The outlook is stable, in line with the outlook on the BFSR.

The subordinated debt rating of UniCredit Bank AG was downgraded to Baa2 from A2, moving the rating to one notch below the bank's Adjusted BCA of Baa1. The outlook is stable, in line with the outlook on the BFSR.

The subordinated debt rating of Volkswagen Bank GmbH was downgraded to Baa1 from A3, moving the rating to one notch below the bank's Adjusted BCA of A3. The outlook is stable, in line with the outlook on the BFSR.

The subordinated debt rating that forms part of an EMTN program of WestLB was downgraded to (P)B1, with a stable outlook, from (P)Baa1, moving the rating to one notch below the bank's Adjusted BCA of Ba3. The issuer has decided to no longer issue subordinated debt under its EMTN program and there is no subordinated debt outstanding under the program. As a result, following this rating action, the rating will be withdrawn at the current level of (P)B1 with a stable outlook.

PREVIOUS RATING ACTIONS

Moody's last rating action on Bayerische Landesbank (BayernLB) was on 2 March 2010, when Moody's downgraded BayernLB's hybrid ratings.

Domiciled in Munich, Germany, BayernLB reported total assets of EUR332 billion as of 30 September 2010 and a pretax profit for the first nine months of EUR669 million.

Moody's last rating action on Bremer Landesbank was on 22 September 2009, when Moody's affirmed Bremer Landesbank's Aa2/C/Prime-1 ratings.

Domiciled in Bremen, Germany, Bremer Landesbank reported total assets of EUR35 billion as of 30 June 2010 and a pretax profit for the first six months of EUR34 million.

Moody's last rating action on Commerzbank AG (Commerzbank) was on 17 February 2011, when Moody's placed the senior debt and deposit ratings of several Commerzbank group entities on review for possible downgrade.

Domiciled in Frankfurt, Germany, Commerzbank reported total assets of EUR848 billion as of 30 September 2010 and a pretax profit for the first nine months of EUR1,097 million.

Moody's last rating action on DekaBank Deutsche Girozentrale (DekaBank) was on 19 November 2009, when Moody's Investors Service affirmed DekaBank's BFSR C (Aa2) with a stable outlook.

Domiciled in Frankfurt, Germany, DekaBank reported total assets of EUR137 billion as of 30 September 2010 and a pretax profit for the first nine months of 2010 of EUR543 million.

Moody's last rating action on DEPFA Bank plc was on 1 October 2010, when Moody's Investors Service downgraded DEPFA Banks plc's ratings to Baa3/E+/Prime-3.

Domiciled in Dublin, Ireland, DEPFA Bank plc reported total assets of EUR240 billion as of 30 June 2010 and a pretax loss for the first six months of EUR303 million.

Moody's last rating action on Deutsche Apotheker- und Aerztebank eG (apoBank) was on 18 February 2010, when Moody's downgraded apoBank's Tier 1 hybrid securities rating.

Domiciled in Duesseldorf, Germany, apoBank reported total assets of EUR43 billion as of 30 June 2010 and a net profit for the first half year of EUR25 million.

Moody's last rating action on Deutsche Bank AG was on 4 March 2010, when Moody's downgraded Deutsche Bank to Aa3/C+ from Aa1/B.

Domiciled in Frankfurt, Germany, Deutsche Bank AG reported total assets of EUR1,906 billion as of 31 December 2010 and a pretax profit for the year of EUR3,975 million.

Moody's last rating action on Deutsche Hypothekenbank was on 22 October 2010, when Moody's Investors Service assigned a final Baa3 rating to the capital notes issued by Charlottenburg Capital International S.àr.l. & Cie SECS (CCI).

Domiciled in Hannover, Germany, Deutsche Hypothekenbank reported total assets of EUR37 billion as of 30 June 2010 and a pretax profit for the first six months of EUR12 million.

Moody's last rating action on Deutsche Pfandbriefbank AG was on 1 October 2010, when Moody's affirmed the A3 long-term debt and deposit ratings as well as the Baa1 rating for the senior subordinated debt.

Domiciled in Unterschleißheim, Germany, Deutsche Pfandbriefbank AG reported total assets of EUR226 billion at 30 September 2010 and a pretax loss for the first nine months of EUR233 million.

Moody's last rating action on Deutsche Postbank AG was on 19 February 2010, when Moody's downgraded Postbank's ratings to A1/D+ from Aa3/C.

Domiciled in Bonn, Germany, Deutsche Postbank AG reported total assets of EUR231 billion as of 30 September 2010 and a pretax profit for the first nine months of EUR296 million.

Moody's last rating action on DVB Bank S.E. was on 28 September 2009, when Moody's downgraded DVB's BFSR to D+ from C- (Baa3).

Domiciled in Frankfurt, Germany, DVB Bank S.E. reported total assets of EUR20 billion as of 30 June 2010 and a pretax profit for the first six months in 2010 of EUR140 million.

Moody's last rating action on DZ Bank was on 19 February 2010, when Moody's downgraded DZ Bank's hybrid securities ratings.

Domiciled in Frankfurt, Germany, DZ Bank reported total assets of EUR404 billion as of 30 June 2010 and a pretax income for the first half year of EUR616 million.

Moody's last rating action on Eurohypo AG (Eurohypo) was on 17 February 2011, when Moody's placed the senior debt and deposit ratings of several Commerzbank group entities on review for possible downgrade.

Domiciled in Eschborn, Germany, Eurohypo reported total assets of EUR257 billion as of 30 June 2010 and a pretax loss for the first half year of EUR215 million.

Moody's last rating action on HSH Nordbank was on 4 May 2010, when Moody's downgraded HSH Nordbank's long-term debt ratings to A3.

Domiciled in Hamburg, Germany, HSH Nordbank reported total assets of EUR176 billion as of 30 June 2010 and a pretax loss for the first half year of EUR427 million.

Moody's last rating action on IKB Deutsche Industriebank AG was on 17 September 2009, when Moody's confirmed IKB's Baa3/P-3 ratings.

Domiciled in Dusseldorf, Germany, IKB Deutsche Industriebank AG reported total assets of EUR36 billion as of 30 September 2010 and a pretax loss for the first six months of EUR241 million.

Moody's last rating action on Landesbank Baden-Wuerttemberg (LBBW) was on 23 July 2009, when Moody's downgraded LBBW's BFSR to C- from C, the senior unsecured debt and deposit ratings to Aa2 from Aa1 and the subordinated debt rating to Aa3 from Aa2.

Domiciled in Stuttgart, Germany, LBBW reported total assets of EUR417 billion as of 30 June 2010 and a pretax loss for the first half year of EUR321 million.

Moody's last rating action on Landesbank Berlin AG was on 27 October 2010, when Moody's affirmed the D+/A1 ratings.

Landesbank Berlin AG domiciled in Berlin, Germany, reported total assets of EUR140 billion as of 30 September 2010 and a pretax profit for the first nine months of EUR220 million.

Moody's last rating action on Landesbank Hessen-Thueringen GZ was on 2 February 2011, when Moody's downgraded Helaba's grandfathered debt.

Landesbank Hessen-Thueringen GZ domiciled in Frankfurt, Germany, reported total assets of EUR175 billion as of 30 September 2010 and a pretax profit for the first nine months of EUR284 million.

Moody's last rating action on Muenchener Hypothekenbank eG was on 8 December 2009, when Moody's downgraded MünchenerHyp to A1/C- from Aa3/C+, concluding review.

Domiciled in Munich, Germany, Muenchener Hypothekenbank eG reported total assets of EUR36 billion as of 30 September 2010 and a pretax profit for the first three quarters of 2010 of EUR30 million.

Moody's last rating action on Norddeutsche Landesbank GZ was on 25 February 2010, when Moody's downgraded Nord/LB's hybrid ratings.

Norddeutsche Landesbank GZ domiciled in Hannover, Germany, reported total assets of EUR237 billion as of 30 September 2010 and a pretax profit for the first nine months of EUR154 million.

Moody's last rating action on Sparkasse KoelnBonn was on 15 March 2010, when Moody's downgraded Sparkasse KoelnBonn's ratings to A1/D- from Aa2/C.

Domiciled in Cologne, Germany, Sparkasse KoelnBonn reported total assets of EUR30 billion at 31 December 2009 and a pretax loss for 2009 of EUR120 million.

Moody's last rating action on UniCredit Bank AG was on 11 March 2010, when Moody's downgraded UniCredit Bank's hybrid securities ratings.

Domiciled in Munich, Germany, UniCredit Bank AG reported total assets of EUR412 billion as of 30 September 2010 and a pretax profit for the first nine months of EUR1,686 million.

Moody's last rating action on Volkswagen Bank GmbH was on 23 September 2010, when Moody's downgraded Volkswagen Bank's BFSR to C-; A2 long-term rating confirmed.

Volkswagen Bank GmbH domiciled in Brunswick, Germany reported total assets of EUR34 billion as of 30 June 2010 and a pretax profit for the first half year of EUR188 million.

Moody's last rating action on WestLB was on 4 May 2010, when Moody's downgraded WestLB's senior unsecured debt and deposit ratings to A3 from A2 and its subordinated debt ratings to Baa1 from A3.

Domiciled in Dusseldorf, Germany, WestLB reported total assets of EUR220 billion as of 30 September 2010 and a pretax loss for the first nine months of EUR33 million.

REGULATORY DISCLOSURES

Information sources used to prepare the credit rating are the following: parties involved in the ratings and public information.

Moody's Investors Service considers the quality of information available on the issuer or obligation satisfactory for the purposes of maintaining a credit rating.

The lead analyst names for each of the ratings affected is available on the issuer/entity page on www.moodys.com. and information on the MIS office that has issued the rating is available on the ratings tab of the issuer/entity page. The contact and office listed above is generally different from the Lead Analyst and the rating office.

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 rating process.

Please see ratings tab on the issuer/entity page on Moodys.com for the last rating action and the rating history.

The date on which some Credit Ratings were first released goes back to a time before Moody's Investors Service's Credit Ratings were fully digitized and accurate data may not be available. Consequently, Moody's Investors Service provides a date that it believes is the most reliable and accurate based on the information that is available to it. Please see the ratings disclosure page on our website www.moodys.com for further information.

Please see the Credit Policy page on Moodys.com for the methodologies used in determining ratings, further information on the meaning of each rating category and the definition of default and recovery.

New York
David Fanger
Senior Vice President
Financial Institutions Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

New York
Robert Young
MD - Financial Institutions
Financial Institutions Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Moody's Investors Service
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Moody's downgrades German banks' subordinated debt
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CREDIT RATINGS ISSUED BY MOODY'S INVESTORS SERVICE, INC. AND ITS RATINGS AFFILIATES (“MIS”) ARE MOODY’S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND MOODY’S PUBLICATIONS MAY INCLUDE MOODY’S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES. 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. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS AND MOODY’S 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. CREDIT RATINGS AND MOODY’S PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND CREDIT RATINGS AND MOODY’S PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. NEITHER CREDIT RATINGS NOR MOODY’S PUBLICATIONS COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MOODY’S ISSUES ITS CREDIT RATINGS AND PUBLISHES MOODY’S 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.

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CREDIT RATINGS AND MOODY’S 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 rating process or in preparing the Moody’s 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 SUCH RATING OR 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 rating, agreed to pay to Moody’s Investors Service, Inc. for appraisal and rating services rendered by it fees ranging from $1,500 to approximately $2,500,000. MCO and MIS also maintain policies and procedures to address the independence of MIS’s ratings and rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold ratings from MIS 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 — 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. It would be reckless and inappropriate for retail investors to use MOODY’S credit ratings or publications when making an investment decision. If in doubt you should contact your financial or other professional adviser.

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 rating, agreed to pay to MJKK or MSFJ (as applicable) for appraisal and rating services rendered by it fees ranging from JPY200,000 to approximately JPY350,000,000.

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