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Rating Action:

Moody's reviews Caixabank's ratings for downgrade and BPI's ratings for upgrade

19 Feb 2015

Actions follow tender offer announcement

Madrid, February 19, 2015 -- Moody's Investors Service has today placed on review for downgrade Caixabank's Baa3 long-term debt, issuer and deposit ratings, its Ba2 subordinated debt rating and the D+ bank financial strength rating (BFSR; equivalent to a ba1 baseline credit assessment [BCA]). Moody's also placed Caixabank's Prime-3 short-term debt and deposit ratings on review for downgrade.

At the same time, Moody's has placed on review for upgrade the Ba3 long-term debt, issuer and deposit ratings of Banco BPI S.A. (BPI) and its supported entities, its B2 subordinated debt rating, the (P)B3 junior subordinated debt rating and the Caa1(hyb) preferred shares rating. The E+ BFSR (equivalent to a b1 BCA) and the Not-Prime short-term debt and deposit ratings were not affected and remain unchanged.

The review for downgrade reflects Caixabank's announcement on 17 February to launch a public tender offer for the acquisition of BPI's not-yet-owned share capital (55.9%), and the negative impact the deal will have on Caixabank's solvency. The review for upgrade for BPI indicates the upward pressure that could stem from the acquisition by a stronger bank.

Please refer to the end of this press release for a list of all the affected ratings.

RATINGS RATIONALE

-- RATIONALE FOR THE REVIEW FOR DOWNGRADE OF CAIXABANK'S RATINGS

Today's rating action reflects Caixabank's intention to launch a public tender offer for the acquisition of ordinary shares representing the share capital of Banco BPI and the negative impact it will have on Caixabank's solvency levels. The deal is expected to close by the end of Q2 2015.

Depending on the level of acceptance of the tender offer, the effect on its solvency levels could range from 80 to 140 basis points on its fully loaded Common Equity Tier 1 (FL CET1) ratio. The acquisition will thus bring down Caixabank's FL CET 1 ratio to 10.7%-10.1%, below the 11% average of its European peers.

The success of this deal is subject not only to pertinent regulatory approvals, but also to meeting the following conditions (1) achieving an acceptance level over 5.9% to ensure that Caixabank owns more than a 50% stake in BPI after the offer; and (2) the elimination of the 20% voting cap currently included in BPI's bylaws.

This offer is voluntary, with a price of EUR1.33 per share payable in cash, and is directed to all the outstanding shares of BPI that CaixaBank does not hold (current shareholding of 44.1%).

-- FOCUS OF THE REVIEW

The bank has stated that it will reach a FL CET1 ratio above 11% post-acquisition. During the review period Moody's will focus on Caixabank's capacity to restore its solvency and risk-absorption capacity in a timely fashion.

Moody's believes that the impact on asset quality and cost efficiency should be limited and manageable, given the relative size of BPI versus Caixabank (EUR42.6 billion in assets at end-2014 versus EUR339 billion, respectively) and Caixabank's strong track record in delivering cost synergies. In addition, Caixabank's long-standing ownership at BPI should help ease the transaction's execution risks.

-- RATIONALE FOR THE REVIEW FOR UPGRADE OF BPI'S LONG-TERM RATINGS

Moody's considers that BPI's senior creditors could benefit from Caixabank's parental support if the announced tender offer is successfully completed, therefore mitigating the risks emerging from the bank's still-modest credit fundamentals. Unlike previous acquisitions, Caixabank intends to maintain BPI as an independent subsidiary.

WHAT COULD CHANGE RATINGS UP/DOWN

Upward pressure on Caixabank's ratings is unlikely given the current review for downgrade.

Downward pressure could materialise if Caixabank fails to restore its solvency and/or if the ongoing improving trend of its asset quality and profitability is reversed.

BPI's long-term ratings could be upgraded if Moody's assessment of parental support from Caixabank is deemed to be high.

LIST OF AFFECTED RATINGS

On Review for Downgrade:

..Issuer: Caixabank

.... Bank Financial Strength Rating, Placed on Review for Downgrade, currently D+ STA (equivalent to BCA ba1)

.... Issuer Rating, Placed on Review for Downgrade, currently Baa3 STA

.... Long-term Deposit Rating, Placed on Review for Downgrade, currently Baa3 STA

.... Short-term Deposit Rating, Placed on Review for Downgrade, currently P-3

....Subordinate Regular Bond/Debenture, Placed on Review for Downgrade, currently Ba2 STA

....Senior Unsecured Regular Bond/Debenture, Placed on Review for Downgrade, currently Baa3 STA

....Backed Senior Unsecured Regular Bond/Debenture, Placed on Review for Downgrade, currently Baa3 STA

....Subordinate Medium-Term Note Program, Placed on Review for Downgrade, currently (P)Ba2

....Senior Unsecured Medium-Term Note Program, Placed on Review for Downgrade, currently (P)P-3

....Senior Unsecured Medium-Term Note Program, Placed on Review for Downgrade, currently (P)Baa3

On Review for Upgrade:

..Issuer: Banco BPI S.A.

.... Issuer Rating, Placed on Review for Upgrade, currently Ba3 NEG

....Long-term Deposit Rating, Placed on Review for Upgrade, currently Ba3 NEG

....Senior Unsecured Regular Bond/Debenture, Placed on Review for Upgrade, currently Ba3 NEG

....Subordinate Regular Bond/Debenture, Placed on Review for Upgrade, currently B2 STA

....Junior Subordinate Medium-Term Note Program, Placed on Review for Upgrade, currently (P)B3

....Subordinate Medium-Term Note Program, Placed on Review for Upgrade, currently (P)B2

....Senior Unsecured Medium-Term Note Program, Placed on Review for Upgrade, currently (P)Ba3

..Issuer: BPI Capital Finance Ltd.

....Backed Subordinate Medium-Term Note Program, Placed on Review for Upgrade, currently (P)B2

....Backed Junior Subordinate Medium-Term Note Program, Placed on Review for Upgrade, currently (P)B3

....Backed Senior Unsecured Medium-Term Note Program, Placed on Review for Upgrade, currently (P)Ba3

....Backed Pref. Stock Non-cumulative Preferred Stock, Placed on Review for Upgrade, currently Caa1(hyb) STA

..Issuer: Banco BPI Cayman Ltd

....Backed Subordinate Medium-Term Note Program, Placed on Review for Upgrade, currently (P)B2

....Backed Junior Subordinate Medium-Term Note Program, Placed on Review for Upgrade, currently (P)B3

....Backed Senior Unsecured Medium-Term Note Program, Placed on Review for Upgrade, currently (P)Ba3

..Issuer: Banco BPI S.A. (Cayman)

....Senior Unsecured Regular Bond/Debenture, Placed on Review for Upgrade, currently Ba3 NEG

....Subordinate Regular Bond/Debenture, Placed on Review for Upgrade, currently B2 STA

....Junior Subordinate Medium-Term Note Program, Placed on Review for Upgrade, currently (P)B3

....Subordinate Medium-Term Note Program, Placed on Review for Upgrade, currently (P)B2

....Senior Unsecured Medium-Term Note Program, Placed on Review for Upgrade, currently (P)Ba3

..Issuer: Banco BPI S.A. (Madeira)

....Junior Subordinate Medium-Term Note Program, Placed on Review for Upgrade, currently (P)B3

....Subordinate Medium-Term Note Program, Placed on Review for Upgrade, currently (P)B2

....Senior Unsecured Medium-Term Note Program, Placed on Review for Upgrade, currently (P)Ba3

..Issuer: Banco BPI S.A. (Santa Maria)

....Junior Subordinate Medium-Term Note Program, Placed on Review for Upgrade, currently (P)B3

....Subordinate Medium-Term Note Program, Placed on Review for Upgrade, currently (P)B2

....Senior Unsecured Medium-Term Note Program, Placed on Review for Upgrade, currently (P)Ba3

Ratings unaffected

..Issuer: Banco BPI S.A.

....Bank Financial Strength Rating, E+ STA (equivalent to a b1 BCA)

....Short-term Deposit Rating, NP

....Senior Unsecured Medium-Term Note Program, (P)NP

..Issuer: BPI Capital Finance Ltd.

....Backed Senior Unsecured Medium-Term Note Program, (P)NP

..Issuer: Banco BPI Cayman Ltd

....Backed Commercial Paper, NP

....Backed Senior Unsecured Medium-Term Note Program, (P)NP

..Issuer: Banco BPI S.A. (Cayman)

....Senior Unsecured Medium-Term Note Program, (P)NP

..Issuer: Banco BPI S.A. (Madeira)

....Senior Unsecured Medium-Term Note Program, (P)NP

..Issuer: Banco BPI S.A. (Santa Maria)

....Senior Unsecured Medium-Term Note Program, (P)NP

Outlook Actions:

....Outlook, Changed To Rating Under Review From Negative(m)

..Issuer: Banco BPI Cayman Ltd

..Issuer: Banco BPI S.A.

..Issuer: Banco BPI S.A. (Cayman)

..Issuer: Banco BPI S.A. (Madeira)

..Issuer: Banco BPI S.A. (Santa Maria)

..Issuer: BPI Capital Finance Ltd.

....Outlook, Changed To Rating Under Review From Stable

..Issuer: Caixabank

PRINCIPAL METHODOLOGY

The principal methodology used in these ratings was Global Banks published in July 2014. 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 certain 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 certain 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 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 ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this rating action, and whose ratings may change as a result of this 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 below contact information is provided for information purposes only. Please see the ratings tab of the issuer page at www.moodys.com, for each of the ratings covered, Moody's disclosures on the lead analyst and the Moody's legal entity that has issued the ratings.

Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.

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.

Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each 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 Felix 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 reviews Caixabank's ratings for downgrade and BPI's ratings for upgrade
No Related Data.
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