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Global Credit Research - 28 Jan 2011
Madrid, January 28, 2011 -- Moody's Investors Service has taken the following actions on Caja de Ahorros
y Pensiones de Barcelona ("La Caixa", rated Aa2 on review
for possible downgrade/Prime-1/B- and Criteria CaixaCorp
(Criteria, rated A2), in response to the announcement that
La Caixa will transfer its banking activities to a commercial bank (CaixaBank,
Moody's has placed on review for possible upgrade the A2 long-term
issuer rating of Criteria CaixaCorp.
At the same time, Moody's has maintained the existing review
for possible downgrade of La Caixa's Aa2 senior and the Aa3 subordinated
ratings; and it has affirmed its B- BFSR and the Baa2 on its
preference shares, both with a negative outlook. The short-term
deposit rating was affirmed at Prime-1.
DETAILS OF THE TRANSACTION
On January 27, the board of directors of both La Caixa and Criteria
agreed on the transformation of La Caixa into a bank by transferring its
assets and liabilities to Criteria, with the exception of its real
estate assets and 8.2 billion of net long-term debt.
In exchange, Criteria will transfer to La Caixa part of its industrial
stakes and 2 billion new shares of the entity. Subsequent
to these transactions, Criteria will be converted into a bank from
its current holding company status. La Caixa, which will
maintain its savings bank charter, will continue to manage its existing
social welfare fund.
Once the transfer is effective, CaixaBank will have a balance sheet
of 272 billion (pro-forma at end-September 2010).
The transaction is subject to the approval of La Caixa's general
assembly and of Criteria shareholders' meeting which are expected
to take place in April and in May, respectively.
REVIEW FOR POSSIBLE UPGRADE OF CRITERIA'S LONG-TERM ISSUER
Moody's decision of placing Criteria's long-term issuer
rating on review for possible upgrade follows the agreed conversion of
Criteria into a bank (CaixaBank) to which la Caixa will transfer all of
its banking business.
With 272 billion in assets, CaixaBank enjoys a pro-forma
core capital ratio of 9.9% -- which is stronger
than that of the existing group of 8.6% --
that will increase to 10.9% following the issuance of 1.5
billion mandatory convertible bonds that is expected to take place in
June 2011. The stronger credit profile of CaixaBank versus La Caixa
is furher reinforced by the fact that La Caixa will not transfer to CaixaBank
its portfolio of real estate assets which are likely to be subject to
The rating review will focus on any changes to the current transformation
plan, which is still subject to approval by the General Assembly
of La Caixa and the shareholder's meeting of Criteria. Moody's
expects the transaction to close in July 2011. In the absence of
any significant deviations from the transformation plan or other material
performance changes of the credit profile of CaixaBank, Moody's
said that the new bank would likely be rated at the same level as it currently
rates La Caixa, at B- (mapping into a standalone rating of
A1 on the long-term rating scale)/Prime-1.
REVIEW FOR POSSIBLE DOWNGRADE OF LA CAIXA'S RATINGS UNCHANGED
Although La Caixa will maintain its current legal status of a savings
bank, it will neither take deposits nor carry out any banking activity.
This transformation produces a "de facto" structural subordination
of La Caixa's current creditors to those of the operating bank (i.e.
CaixaBank) as the payment of La Caixa's debt will be largely dependent
on the dividends upstreamed by CaixaBank which will be La Caixa's
most significant revenue source.
This dependence is somewhat mitigated by the long-term maturities
of La Caixa's debt ( 2 billion of government guaranteed debt
in 2012 and 6.2 billion of subordinated debt maturing mainly
in 2019 and 2020) and the liquidity support that La Caixa will receive
from CaixaBank to allow the repayment of the 2 billion debt that
matures in 2012.
Typically Moody's rates such holding company structures one notch
below the rating of its operating company to reflect the risk of structural
subordination. The review for possible downgrade of LaCaixa's
rating will focus on these risks and also on the potential support available
to the holding company.
Furthermore, Moody's stated that La Caixa's senior and
dated subordinated debt ratings as wells its deposit ratings have been
under review for possible downgrade since December 20, 2010,
aligned with other 30 Spanish banks that were placed on review for possible
downgrade subsequent to Moody's decision on 15 December 2010 to place
the Kingdom of Spain's Aa1 bond rating on review for possible downgrade.
Should the sovereign review conclude before the closure of this transaction,
this may well result in the review being kept open beyond any rating action
on the Kingdom of Spain.
La Caixa's B- BFSR has been affirmed at current level,
while maintaining its negative outlook. This stand-alone
rating will likely be withdrawn at the time of transformation, as
the entity will seize to take deposits.
The Prime-1 short-term rating of La Caixa has been affirmed
at current level, and will also bewithdrawn at the time of transformation
as La Caixa will not have any short-term debt outstanding.
PREVIOUS RATING ACTIONS & PRINCIPAL METHODOLOGIES
Moody's last rating action on Criteria CaixaCorp was implemented
on 08 July 2010, when the rating agency assigned a first-time
A2 issuer rating to the bank, with stable outlook.
Moody's last rating action on La Caixa was implemented on 20 December
2010, when the bank's senior and dated subordinated debt ratings
as wells its deposit ratings have been placed under review for possible
The principal methodology used in rating Criteria was "Moody's Global
Investment Holding Companies", published in October 2007 and
available on www.moodys.com. Other methodologies
and factors that may have been considered in the process of rating this
issuer can also be found on Moody's website.
The principal methodologies used in rating La Caixa are Moody's "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, both of which are available on www.moodys.com.
Other methodologies and factors that may have been considered in the process
of rating these issuers can also be found on Moody's website.
Headquartered in Barcelona, Spain, Criteria CaixaCorp is a
holding company with investments in financial and service companies.
Its portfolio had a gross asset value of EUR24 billion at the end of December
Caja de Ahorros y Pensiones de Barcelona is headquartered in Barcelona,
Spain. At 31 December 2010 it had total assets of EUR 286 billion.
MD - Banking
Financial Institutions Group
Moody's Investors Service Ltd.
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454
Senior Vice President
Financial Institutions Group
Moody's Investors Service Espana, S.A.
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454
Moody's Investors Service Espana, S.A.
Moody's takes action on La Caixa and Criteria following restructuring announcement
Barbara de Braganza, 2
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454
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