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Rating Action:

Moody's takes rating actions on Portuguese banks

16 Oct 2018

Rating actions follow the upgrade of Portugal's government bond rating to Baa3

Madrid, October 16, 2018 -- Moody's Investors Service has today taken rating actions on six Portuguese banking groups. The rating actions were prompted by the rating agency's upgrade of Portugal's government bond rating to Baa3 from Ba1 with a stable outlook. For further information on the sovereign rating action, please refer to Moody's press release dated 12 October 2018 (https://www.moodys.com/research/--PR_389997).

Consequently, Moody's changed Portugal's Macro Profile to "Moderate" from "Moderate-", driven by the improvement in Portuguese banks' operating environment, in particular the country's economic strength. The strengthening of the Macro Profile has led Moody's to review all of its rated Portuguese banks' financial factors and standalone credit profiles, thereby also taking into account continued progress in several banks' performance and financial fundamentals which is reflected in today's ratings actions.

For a detailed analysis of Portugal's Macro Profile please see: "Portugal Macro Profile: Moderate" (http://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1140329).

Among the actions taken today by Moody's on the affected banks are the following:

- Upgrade of Caixa Geral de Depositos, S.A.'s (CGD) long-term deposit and senior unsecured debt ratings to Ba1 from Ba3 with a stable outlook. CGD's Baseline Credit Assessment (BCA) and adjusted BCA were upgraded to ba2 from b1.

- Upgrade of Banco Comercial Portugues, S.A.'s (BCP) long-term deposit ratings to Ba3 from B1 with a positive outlook and of its senior unsecured programme ratings to (P)Ba3 from (P)B1. BCP's BCA and adjusted BCA were upgraded to b1 from b2.

- Upgrade of Banco Santander Totta S.A.'s (BST) long-term deposit ratings to Baa2 from Baa3 and of its long-term senior unsecured debt ratings to Baa3 from Ba1, both with a stable outlook. BST's BCA was upgraded to ba2 from ba3 and its adjusted BCA to baa3 from ba1.

- Upgrade of Banco BPI S.A.'s (BPI) long-term deposit ratings to Baa1 from Baa3 with a change of outlook to stable from positive and of its senior unsecured programme ratings to (P)Baa2 from (P)Ba1. BPI's BCA was upgraded to ba1 from ba3 and its adjusted BCA to baa3 from ba2.

- Affirmation of Caixa Economica Montepio Geral, Caixa Economica Bancaria, S.A.'s (CEMG) long-term deposit ratings at B3 with a change of outlook to positive from developing and of its senior unsecured programme ratings at (P)B3. CEMG's BCA and adjusted BCA were affirmed at caa1.

- Placing on review for upgrade of Novo Banco, S.A.'s (Novo Banco) Caa1 long-term deposit ratings and of its Caa2 long-term senior unsecured debt ratings. The outlook on these ratings was changed to rating under review from developing and positive respectively. The bank's caa2 BCA and adjusted BCA were also placed on review for upgrade.

A full list of the affected ratings can be found at the end of this press release.

RATINGS RATIONALE

(1) UPGRADE OF PORTUGAL'S GOVERNMENT BOND RATING AND CHANGE IN THE MACRO PROFILE REFLECTS IMPROVING OPERATING CONDITIONS FOR BANKS IN PORTUGAL

Today's rating actions follow the rating agency's decision to upgrade Portugal's government bond rating to Baa3 from Ba1 with a stable outlook. Consequently, Moody's has also changed Portugal's Macro Profile to 'Moderate' from 'Moderate-' to reflect the more favourable operating conditions for banks in Portugal.

By changing Portugal's Macro Profile to Moderate, the rating agency recognises the improving operating conditions for banks owing to the continued economic recovery. The Macro Profile is also underpinned by the country's diversified economy and strong institutions. However, Moody's also takes into account Portugal's challenging credit market conditions, reflecting high levels of private sector debt, notably among non-financial corporates and the banks' high exposures to corporate sector debt. While banks have stabilised their funding and liquidity over recent years and also re-gained access to capital markets, Portuguese banks remain particularly susceptible to changes in market sentiment and to market shocks.

Moody's assessment of a more favourable operating environment for banks, in combination with ongoing improvements in other credit fundamentals, notably asset quality and capital, has resulted in rating upgrades by one to two notches, rating affirmations or rating placements on review for upgrade for the six Portuguese banks affected by today's rating actions.

(2) BANK-SPECIFIC CONSIDERATIONS

-- CAIXA GERAL DE DEPOSITOS, S.A. (CGD)

The two-notch upgrade of CGD's long-term deposit ratings to Ba1 from Ba3 and of its long-term senior unsecured debt ratings to Ba1 from Ba3 was driven by (1) the upgrade of the bank's BCA and adjusted BCA to ba2 from b1; (2) maintaining no uplift from Moody's Advanced LGF analysis; and (3) unchanged moderate government support assumptions for CGD, as Portugal's largest bank, which provides one notch of rating uplift.

CGD's BCA of ba2 reflects the improved Macro Profile in combination with the bank's strengthened credit profile following the large recapitalization undertaken by the Government of Portugal in 2017, allowing CGD to accelerate the cleanup of its balance sheet. As a result, at end-June 2018, CGD's reported fully-loaded Common Equity Tier 1 (CET1) ratio increased to 13.6% from 12.6% a year earlier while its non-performing assets ratio (NPAs; defined as non-performing loans (NPLs) plus real estate assets) declined to 12.0% from 15.9% a year earlier, which compares to an estimated system average of 16.1%. CGD's BCA remains constrained by the bank's improving albeit still-high level of problematic assets and modest profitability despite a recent return to profitability.

The outlook on CGD's long-term deposit and senior debt ratings is stable. The stable outlook incorporates the expectation that the execution of CGD's 2017-20 strategic plan (closely monitored by the European Commission and Portuguese authorities) will proceed with a focus on continued de-risking of the bank's balance sheet and restoring sustainable profitability.

-- BANCO COMERCIAL PORTUGUES, S.A. (BCP)

The one-notch upgrade of BCP´s long-term deposit ratings to Ba3 from B1 and of the long-term senior unsecured debt ratings of its supported entity BCP Finance Bank, Ltd. to Ba3 from B1 was driven by: (1) the upgrade of the bank's BCA and adjusted BCA to b1 from b2; (2) maintaining no uplift from Moody's Advanced LGF analysis; and (3) Moody's assessment of an unchanged moderate government support for BCP, as Portugal's second largest bank, which results in a one notch uplift for both the deposit and senior debt ratings.

By upgrading BCP's BCA to b1, the rating agency primarily reflects the bank's improving credit fundamentals while the bank's average weighted Macro Profile of Moderate remains unchanged, reflecting the balance of risk of BCP's domestic and international exposures. The strengthening of the bank's financial fundamentals is demonstrated by (1) its declining NPA ratio, which stood at 16.0% at end-June 2018, down from 20.7% a year earlier; as well as (2) its enhanced risk-absorption capacity against the still weak asset-risk profile, with the Texas ratio (measured as NPAs / shareholders' equity + loan-loss and real estate reserves) declining to 90% from 108% a year earlier. Further, Moody's more favourable assessments of BCP's BCA is supported by the bank's improving albeit still modest domestic bottom-line profitability, which is enhanced by the positive contribution from the bank's international operations. BCP also lowered its reliance on wholesale funding, and has only modest refinancing needs as a result of continued balance-sheet deleveraging over recent years.

The positive outlook on BCP's long-term debt and deposit ratings reflects the positive pressure that could develop on the bank's ratings if BCP continues to reduce the stock of problematic assets and improve its loss-absorption capacity over the outlook period.

-- BANCO SANTANDER TOTTA S.A. (BST)

The one notch upgrade of BST's deposit ratings to Baa2/Prime-2 from Baa3/Prime-3 and of the bank's senior unsecured debt ratings to Baa3 from Ba1 reflects: (1) the upgrade of the bank's BCA to ba2 from ba3; (2) maintaining a high probability of affiliate support from Banco Santander S.A. (Spain) (A2 stable/(P)A2; baa1), reflected in two notches of uplift to the baa3 adjusted BCA; and (3) the result from Moody's Advanced LGF analysis that leads to one notch of additional ratings uplift for the deposit ratings and no further uplift for the debt ratings. Moody's assigns a low probability of government support for BST's deposit and senior debt ratings resulting in no uplift for these ratings.

BST's BCA of ba2 reflects the improved Macro Profile against an overall resilient financial profile. This assessment also takes into account the weakening of some of the bank's key metrics following the acquisition of Banco Popular Portugal S.A. (BAPOP) that became effective on 27 December 2017. In particular, BST reported (1) relatively weaker asset risk metrics (i.e. the NPA ratio increased to 9.5% at end-June 2018 from 8.3% a year earlier); as well as (2) weaker capital with the fully-loaded CET 1 ratio declining to 12.6% at end-June 2018 from 16.1% a year earlier. BST's BCA also reflects Moody's expectation of a further strengthening of its credit profile, underpinned by its sound profitability (net profit standing at 0.9% of tangible assets at end-June 2018), as well as further steps taken to significantly reduce legacy assets from BAPOP.

The outlook on the deposit and senior debt ratings is stable, thereby incorporating Moody's view that BST's credit profile will gradually strengthen over the next 12 to 18 months as the integration and de-risking of BAPOP is completed.

-- BANCO BPI S.A. (BPI)

The two-notch upgrade of BPI's long-term deposit ratings to Baa1 from Baa3 and of the long-term senior unsecured debt ratings of its supported entity Banco BPI S.A. (Cayman) to Baa2 from Ba1 was driven by: (1) the upgrade of the BCA to ba1 from ba3; (2) maintaining a high likelihood of affiliate support from CaixaBank, S.A. (CaixaBank; Baa1 stable/Baa1 stable; baa3), resulting in a one-notch uplift to an adjusted BCA of baa3; and (3) Moody's Advanced LGF analysis that provides an unchanged two-notch uplift for deposits and one-notch of uplift for senior debt from the bank's adjusted BCA. There is no government support uplift for these ratings, given Moody's assumption that the probability of such support is low.

BPI's BCA of ba1 reflects the improved Macro Profile in combination with the bank's strengthened credit profile following the progressive alignment of BPI's business strategies and operations with those of its parent Caixabank. In particular, Moody's has considered: (1) the bank's enhanced capital levels, which are, however, constrained by the risks stemming from BPI's Angolan exposure (fully-loaded CET1 ratio increased to 12.8% from 10.9% a year earlier); (2) its low level of NPAs, with the NPA ratio standing at 4.8%, well below the Portuguese system average; and (3) its improving profitability metrics, with increased domestic bottom-line earnings offsetting the lower contribution of the international activities. BPI's BCA also reflects the bank's sound market position in Portugal and its adequate liquidity profile.

The stable outlook on the long-term deposit and senior debt ratings reflects our view that the expected improvement in BPI's financial fundamentals is already captured in the bank's current rating levels.

-- CAIXA ECONOMICA MONTEPIO GERAL, CAIXA ECONOMICA BANCARIA, S.A. (CEMG)

The affirmation of CEMG's long-term deposit ratings at B3 and of its senior unsecured programme ratings at (P)B3 reflects: (1) the affirmation of the bank's BCA and adjusted BCA at caa1; and (2) Moody's Advanced LGF analysis that provides an unchanged one-notch uplift from the bank's adjusted BCA. There is no government support uplift for these ratings, given Moody's assumption that the probability of such support is low.

By affirming CEMG's caa1 BCA, the rating agency reflects persistent solvency challenges despite some gradual progress in terms of de-risking the balance sheet and strengthening of capitalisation which should be further supported by the improving operating environment as reflected in the Moderate Macro Profile. At end-June 2018, CEMG displays still weak risk-absorption capacity amid significant asset-quality challenges (Texas ratio of 118% and an NPA ratio of 22.4% at end-June 2018), while a net profit of modest 0.2% of tangible assets was reported at end-June 2018, after returning to profitability in 2017.

The positive outlook on CEMG's long-term deposit ratings reflects our expectation that the execution of the bank's transformation plan will gradually strengthen its credit fundamentals. In addition, the positive outlook also reflects the potential for upward rating pressure if CEMG maintains or increases the current loss-absorbing cushion provided by the bank's customer deposits.

-- NOVO BANCO, S.A.

The review for upgrade of Novo Banco's caa2 BCA and adjusted BCA and of its Caa1 long-term deposit and Caa2 long-term senior unsecured debt ratings was prompted by the improvement in Portugal's Macro Profile. The review for upgrade also reflects the potential benefit to the bank's weak credit fundamentals if Novo Banco starts to deliver on the key targets of its restructuring plan, namely an improvement in its asset-risk profile, a transformation of its operations and a recovery in its very weak revenue generation capacity. Novo Banco's long-term deposit and senior debt ratings could also face upward pressure if the bank increases the volume of bail-in-able liabilities, which would translate into a lower loss given failure for these instruments.

Moody's expects to conclude the rating review following the analysis of the bank's Q3 2018 results including an assessment of Novo Banco's medium-term strategy and measures that are being considered to ensure its future viability. In concluding the rating review, the rating agency will also assess the evolution of Novo Banco's funding structure and its effect on the outcome of Moody's Advanced LGF analysis.

FACTORS THAT COULD LEAD TO AN UPGRADE

Banks' standalone BCAs could be upgraded as a consequence of a further material decline in the stock of problematic assets, coupled with a sustained recovery of recurrent profitability levels. The banks' BCAs could also be upgraded on the back of stronger Tangible Common Equity (TCE) levels.

As the banks' debt and deposit ratings are linked to the standalone BCA, any change to the BCA would likely also affect these ratings.

The bank's deposit and senior debt ratings could also experience upward pressure from movements in the loss-given-failure faced by these securities.

FACTORS THAT COULD LEAD TO A DOWNGRADE

Downward pressure on the banks' BCAs could develop as a result of: (1) a reversal in current asset risk trends with an increase in the stock of non-performing loans (NPLs) and/or other problematic exposures; (2) banks failing to maintain their risk-absorption capacity due to asset quality weakening and/or additional provisioning efforts in excess of capital generation capacity; and/or (3) a deterioration in the banks' liquidity position.

As the banks' debt and deposit ratings are linked to the standalone BCA, any change to the BCA would likely also affect these ratings.

The bank's deposit and senior debt ratings could also experience downward pressure from movements in the loss-given-failure faced by these securities.

LIST OF AFFECTED RATINGS

Issuer: Caixa Geral de Depositos, S.A.

..Upgrades:

....Long-term Counterparty Risk Rating, upgraded to Baa3 from Ba1

....Short-term Counterparty Risk Ratings, upgraded to P-3 from NP

....Long-term Bank Deposits, upgraded to Ba1 Stable from Ba3 Stable

....Long-term Counterparty Risk Assessment, upgraded to Baa2(cr) from Ba1(cr)

....Short-term Counterparty Risk Assessment, upgraded to P-2(cr) from NP(cr)

....Baseline Credit Assessment, upgraded to ba2 from b1

....Adjusted Baseline Credit Assessment, upgraded to ba2 from b1

....Senior Unsecured Regular Bond/Debenture, upgraded to Ba1 Stable from Ba3 Stable

....Senior Unsecured Medium-Term Note Program, upgraded to (P)Ba1 from (P)Ba3

....Subordinate Regular Bond/Debenture, upgraded to Ba3 from B2

....Subordinate Medium-Term Note Program, upgraded to (P)Ba3 from (P)B2

....Preferred Stock Non-cumulative, upgraded to B2(hyb) from Caa1(hyb)

..Affirmations:

....Short-term Bank Deposits, affirmed NP

....Commercial Paper, affirmed NP

....Other Short Term, affirmed (P)NP

..Outlook Action:

....Outlook remains Stable

Issuer: Caixa Geral Finance Limited

..Upgrades:

....Backed Preferred Stock Non-cumulative, upgraded to B2(hyb) from Caa1(hyb)

..No Outlook assigned

Issuer: Caixa Geral de Depositos Finance

..Affirmation:

....Backed Commercial Paper, affirmed NP

..No Outlook assigned

Issuer: Caixa Geral de Depositos, S.A. (Paris)

..Upgrades:

....Long-term Counterparty Risk Ratings, upgraded to Baa3 from Ba1

....Short-term Counterparty Risk Ratings, upgraded to P-3 from NP

....Long-term Counterparty Risk Assessment, upgraded to Baa2(cr) from Ba1(cr)

....Short-term Counterparty Risk Assessment, upgraded to P-2(cr) from NP(cr)

....Senior Unsecured Regular Bond/Debenture, upgraded to Ba1 Stable from Ba3 Stable

....Senior Unsecured Medium-Term Note Program, upgraded to (P)Ba1 from (P)Ba3

....Subordinate Regular Bond/Debenture, upgraded to Ba3 from B2

....Subordinate Medium-Term Note Program, upgraded to (P)Ba3 from (P)B2

..Affirmations:

....Commercial Paper, affirmed NP

....Other Short Term, affirmed (P)NP

..Outlook Action:

....Outlook remains Stable

Issuer: Banco Comercial Portugues, S.A.

..Upgrades:

....Long-term Counterparty Risk Ratings, upgraded to Ba1 from Ba2

....Long-term Bank Deposits, upgraded to Ba3 Positive from B1 Positive

....Long-term Counterparty Risk Assessment, upgraded to Baa3(cr) from Ba1(cr)

....Short-term Counterparty Risk Assessment, upgraded to P-3(cr) from NP(cr)

....Baseline Credit Assessment, upgraded to b1 from b2

....Adjusted Baseline Credit Assessment, upgraded to b1 from b2

....Senior Unsecured Medium-Term Note Program, upgraded to (P)Ba3 from (P)B1

....Subordinate Regular Bond/Debenture, upgraded to B2 from B3

....Subordinate Medium-Term Note Program, upgraded to (P)B2 from (P)B3

....Preferred Stock Non-cumulative, upgraded to Caa1(hyb) from Caa2(hyb)

..Affirmations:

....Short-term Counterparty Risk Ratings, affirmed NP

....Short-term Bank Deposits, affirmed NP

....Other Short Term, affirmed (P)NP

..Outlook Action:

....Outlook remains Positive

Issuer: BCP Finance Bank, Ltd.

..Upgrade:

....Backed Senior Unsecured Regular Bond/Debenture, upgraded to Ba3 Positive from B1 Positive

..Affirmation:

....Backed Commercial Paper, affirmed NP

..Outlook Action:

....Outlook remains Positive

Issuer: BCP Finance Company

..Upgrades:

....Backed Subordinate Shelf, upgraded to (P)B2 from (P)B3

....Backed Preferred Stock Non-cumulative, upgraded to Caa1(hyb) from Caa2(hyb)

..No Outlook assigned

Issuer: Banco Comercial Portugues, SA, Macao Br

..Upgrades:

....Long-term Counterparty Risk Ratings, upgraded to Ba1 from Ba2

....Long-term Bank Deposits, upgraded to Ba3 Positive from B1 Positive

....Long-term Counterparty Risk Assessment, upgraded to Baa3(cr) from Ba1(cr)

....Short-term Counterparty Risk Assessment, upgraded to P-3(cr) from NP(cr)

..Affirmations:

....Short-term Counterparty Risk Ratings, affirmed NP

....Short-term Bank Deposits, affirmed NP

..Outlook Action:

....Outlook remains Positive

Issuer: Banco Santander Totta S.A.

..Upgrades:

....Long-term Counterparty Risk Rating, upgraded to Baa1 from Baa2

....Long-term Bank Deposits, upgraded to Baa2 Stable from Baa3 Stable

....Short-term Bank Deposits, upgraded to P-2 from P-3

....Long-term Counterparty Risk Assessment, upgraded to Baa2(cr) from Baa3(cr)

....Short-term Counterparty Risk Assessment, upgraded to P-2(cr) from P-3(cr)

....Baseline Credit Assessment, upgraded to ba2 from ba3

....Adjusted Baseline Credit Assessment, upgraded to baa3 from ba1

....Senior Unsecured Regular Bond/Debenture, upgraded to Baa3 Stable from Ba1 Stable

....Senior Unsecured Medium-Term Note Program, upgraded to (P)Baa3 from (P)Ba1

....Commercial Paper, upgraded to P-3 from NP

....Other Short Term, upgraded to (P)P-3 from (P)NP

..Affirmation:

....Short-term Counterparty Risk Rating, affirmed P-2

..Outlook Action:

....Outlook remains Stable

Issuer: Banco Santander Totta S.A., London

..Upgrades:

....Long-term Counterparty Risk Rating, upgraded to Baa1 from Baa2

....Long-term Counterparty Risk Assessment, upgraded to Baa2(cr) from Baa3(cr)

....Short-term Counterparty Risk Assessment, upgraded to P-2(cr) from P-3(cr)

....Senior Unsecured Medium-Term Note Program, upgraded to (P)Baa3 from (P)Ba1

....Subordinate Medium-Term Note Program, upgraded to (P)Ba1 from (P)Ba2

....Junior Subordinate Medium-Term Note Program, upgraded to (P)Ba2 from (P)Ba3

....Other Short Term, upgraded to (P)P-3 from (P)NP

..Affirmations:

....Short-term Counterparty Risk Rating, affirmed P-2

..No Outlook assigned

Issuer: TOTTA (IRELAND) p.l.c.

..Upgrade:

....Backed Commercial Paper, upgraded to P-3 from NP

..No Outlook assigned

Issuer: Banco BPI S.A.

..Upgrades:

....Long-term Counterparty Risk Rating, upgraded to Baa1 from Baa2

....Long-term Bank Deposits, upgraded to Baa1 Stable from Baa3 Positive

....Short-term Bank Deposits, upgraded to P-2 from P-3

....Long-term Counterparty Risk Assessment , Upgraded to Baa2(cr) from Baa3(cr)

....Short-term Counterparty Risk Assessment, upgraded to P-2(cr) from P-3(cr)

....Long-term Issuer Rating, upgraded to Baa2 Stable from Ba1 Positive

....Baseline Credit Assessment, upgraded to ba1 from ba3

....Adjusted Baseline Credit Assessment, upgraded to baa3 from ba2

....Senior Unsecured Medium-Term Note Program, upgraded to (P)Baa2 from (P)Ba1

....Subordinate Medium-Term Note Program, upgraded to (P)Ba1 from (P)Ba3

....Junior Subordinate Medium-Term Note Program, upgraded to (P)Ba2 from (P)B1

....Other Short Term, upgraded to (P)P-2 from (P)NP

..Affirmations:

....Short-term Counterparty Risk Rating, affirmed P-2

..Outlook Action:

....Outlook changed to Stable from Positive

Issuer: Banco BPI Cayman Ltd

..Upgrades:

....Backed Commercial Paper, upgraded to P-2 from NP

..No Outlook assigned

Issuer: Banco BPI S.A. (Cayman)

..Upgrades:

....Long-term Counterparty Risk Rating, upgraded to Baa1 from Baa2

....Long-term Counterparty Risk Assessment, upgraded to Baa2(cr) from Baa3(cr)

....Short-term Counterparty Risk Assessment, upgraded to P-2(cr) from P-3(cr)

....Senior Unsecured Regular Bond/Debenture, upgraded to Baa2 Stable from Ba1 Positive

....Subordinate Regular Bond/Debenture, upgraded to Ba1 from Ba3

..Affirmation:

....Short-term Counterparty Risk Rating, affirmed P-2

..Outlook Action:

....Outlook changed to Stable from Positive

Issuer: Banco BPI S.A. (Madeira)

..Upgrades:

....Long-term Counterparty Risk Rating, upgraded to Baa1 from Baa2

....Long-term Counterparty Risk Assessment, upgraded to Baa2(cr) from Baa3(cr)

....Short-term Counterparty Risk Assessment, upgraded to P-2(cr) from P-3(cr)

..Affirmation:

....Short-term Counterparty Risk Rating, affirmed P-2

..No Outlook assigned

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

..Upgrades:

....Long-term Counterparty Risk Ratings, upgraded to Baa1 from Baa2

....Long-term Counterparty Risk Assessment, upgraded to Baa2(cr) from Baa3(cr)

....Short-term Counterparty Risk Assessment, upgraded to P-2(cr) from P-3(cr)

..Affirmation:

....Short-term Counterparty Risk Rating, affirmed P-2

..No Outlook assigned

Issuer: Caixa Economica Montepio Geral, CEB, S.A.

..Upgrades:

....Long-term Counterparty Risk Rating, upgraded to B1 from B2

..Affirmations:

....Short-term Counterparty Risk Rating, affirmed NP

....Long-term Bank Deposits, affirmed B3, outlook changed to Positive from Developing

....Short-term Bank Deposits, affirmed NP

....Long-term Counterparty Risk Assessment, affirmed B1(cr)

....Short-term Counterparty Risk Assessment, affirmed NP(cr)

....Baseline Credit Assessment, affirmed caa1

....Adjusted Baseline Credit Assessment, affirmed caa1

....Senior Unsecured Medium-Term Note Program, affirmed (P)B3

....Subordinate Medium-Term Note Program, affirmed (P)Caa2

....Junior Subordinate Medium-Term Note Program, affirmed (P)Caa3

....Other Short Term, affirmed (P)NP

..Outlook Action:

....Outlook changed to Positive from Developing

Issuer: Novo Banco, S.A.

..Placed on review for upgrade:

....Long-term Counterparty Risk Ratings, currently B2

....Long-term Bank Deposits, currently Caa1, outlook changed to Rating under Review from Developing

....Long-term Counterparty Risk Assessment, currently B2(cr)

....Baseline Credit Assessment, currently caa2

....Adjusted Baseline Credit Assessment, currently caa2

....Senior Unsecured Regular Bond/Debenture, currently Caa2, outlook changed to Rating under Review from Positive

....Subordinate Regular Bond/Debenture, currently Caa3

..Outlook Action:

....Outlook changed to Rating under Review from Developing(m)

Issuer: NB Finance Ltd.

..Placed on review for upgrade:

....Backed Senior Unsecured Regular Bond/Debenture, currently Caa2, outlook changed to Rating under Review from Positive

..Outlook Action:

....Outlook changed to Rating under Review from Positive

Issuer: Novo Banco S.A., Luxembourg Branch

..Placed on review for upgrade:

....Long-term Counterparty Risk Ratings, currently B2

....Long-term Bank Deposits, currently Caa1, outlook changed to Rating under Review from Developing

....Long-term Counterparty Risk Assessment, currently B2(cr)

....Senior Unsecured Regular Bond/Debenture, currently Caa2 outlook changed to Rating under Review from Positive

..Outlook Action:

....Outlook changed to Rating under Review from Developing(m)

Issuer: Novo Banco S.A., London Branch

..Placed on review for upgrade:

....Long-term Counterparty Risk Ratings, currently B2

....Long-term Bank Deposits, currently Caa1, outlook changed to Rating under Review from Developing

....Long-term Counterparty Risk Assessment, currently B2(cr)

..Outlook Action:

....Outlook changed to Rating under Review from Developing

Issuer: Novo Banco, S.A., Cayman Branch

..Placed on review for upgrade:

....Long-term Counterparty Risk Ratings, currently B2

....Long-term Bank Deposits, currently Caa1, outlook changed to Rating under Review from Developing

....Long-term Counterparty Risk Assessment, currently B2(cr)

..Outlook Action:

....Outlook changed to Rating under Review from Developing

Issuer: Novo Banco, S.A., Madeira Branch

..Placed on review for upgrade:

....Long-term Counterparty Risk Assessment, currently B2(cr)

....Long-term Counterparty Risk Ratings, currently B2

....Long-term Bank Deposits, currently Caa1, outlook changed to Rating under Review from Developing

..Outlook Action:

....Outlook changed to Rating under Review from Developing

PRINCPAL METHODOLOGY

The principal methodology used in these ratings was Banks published in August 2018. Please see the Rating Methodologies 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 credit rating action on the support provider and in relation to each particular credit 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 credit rating action, and whose ratings may change as a result of this credit 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.

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

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 rating analyst and the Moody's legal entity that has issued the ratings.

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 Jose Mori
VP - Senior Credit Officer
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
Client Service: 44 20 7772 5454

Carola Schuler
MD - Banking
Financial Institutions Group
JOURNALISTS: 44 20 7772 5456
Client Service: 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
Client Service: 44 20 7772 5454

No Related Data.
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