Madrid, November 16, 2012 -- Moody's Investors Service has today assigned long and short-term deposit ratings of Ba1/Not-Prime and a standalone bank financial strength rating (BFSR) of D (equivalent to a ba2 standalone credit assessment) to the new entity CECABANK, S.A. This follows the transfer of the financial business to CECABANK (effective as of 12 November 2012) from its parent, the savings bank Confederación Española de Cajas de Ahorros (CECA). The review for downgrade for the long-term deposit ratings as well as for the standalone BFSR is maintained following the transfer to CECABANK.
At the same time, Moody's has withdrawn the following ratings of CECA (1) the standalone D/ba2 BFSR; and (2) the long and short-term deposit ratings of Ba1/Not-Prime.
Following the transfer of the financial business, the ratings assigned to CECABANK are at the same level as those formerly assigned to CECA. Subsequent to the segregation of the financial business, CECA's role will be to manage the social-welfare projects and play an associative role for savings banks (financed through dividends paid by CECABANK); it will also act as the holding company of CECA (owning 89% of its total capital). As a result of the transfer, CECABANK has assumed CECA's assets and liabilities, and its debt and deposit obligations. Moody's has consequently withdrawn all of CECA's ratings.
WHAT COULD MOVE THE RATING UP/DOWN
All the ratings of CECABANK are on review for downgrade, as was the case for CECA pre-transfer. The review for downgrade reflects analytical issues specific to CECABANK, which relate to the long-term sustainability of its business model, specifically:
(1) The ongoing consolidation and restructuring process of the savings banks segment which, combined with the declining level of economic activity in Spain, indicates a reduced demand for financial services that constrains CECABANK's recurrent revenue-generation capacity;
(2) The breaking-up of the savings banks segment, which exerts further pressure on CECABANK's critical role as the leading services provider for a segment that, pre-crisis, represented approximately 50% of Spanish banking assets; and
(3) CECABANK's involvement in capital market activities, which contributes to the volatility of its revenues.
Headquartered in Madrid, Spain, CECA had total assets (unaudited) of EUR18.5 billion as of end-June 2012.
The principal methodology used in these ratings was Moody's Consolidated Global Bank Rating Methodology published in June 2012. Please see the Credit Policy page on www.moodys.com for a copy of this methodology.
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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 JOURNALISTS: 44 20 7772 5456 SUBSCRIBERS: 44 20 7772 5454 Johannes 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 (C) 2012 Moody's Investors Service, Inc. and/or its licensors and affiliates (collectively, "MOODY'S"). All rights reserved.
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