Moody’s acts on Banco Popular

Moody's Investors Service said it affirmed all of Banco Santander SA (Spain)'s and its supported entities' ratings: (a) The A3/Prime-2 deposit and senior debt ratings; (b) the (P)Baa2 subordinated debt ratings; (c) the Baa2 junior senior unsecured debt ratings; (d) the Ba1(hyb) and Ba2(hyb) preference shares ratings; (e) the bank's baseline credit assessment (BCA) and adjusted BCA of baa1; and (f) its counterparty risk assessment of A3(cr)/Prime-2(cr).

The outlook for the long-term senior debt and deposit ratings remains stable.

At the same time, the agency took actions on the following ratings of Banco Popular Espanol, SA: (a) Upgraded the long-term deposit ratings to Ba1 from B2 and placed them on review for further upgrade; (b) upgraded the long-term senior program ratings to provisional Ba1 from provisional B3 and placed them on review for further upgrade; and (c) upgraded the counterparty risk assessment to Baa3(cr)/Prime-3(cr) from Ba3(cr)/Not Prime(cr) and placed it on review for further upgrade.

Banco Popular's short-term ratings of Not Prime were also placed on review for upgrade.

Furthermore, Moody's also: (a) downgraded Banco Popular’s BCA to ca; (b) upgraded the adjusted BCA to b1 on review for upgrade from caa1; (c) downgraded the bank's subordinated debt ratings to C from Caa2, and (d) downgraded various ratings of preference stock to C(hyb) from Ca(hyb), which are guaranteed by Banco Popular and issued by several issuing vehicles. Moody's will subsequently withdraw the ratings of Banco Popular's subordinated debt and preference stock.

“The rating actions were triggered by the announcement made on 7 June 2017 by the Single Resolution Board (SRB) and the Spanish resolution authority (the FROB or "Fondo de Reestructuracion Ordenada Bancaria") that they had taken a resolution action in respect of Banco Popular,” Moody’s said in a news release.

“As part of the resolution scheme adopted for the bank, the resolution authorities have decided to transfer Banco Popular to Banco Santander. Prior to the transfer, all of Banco Popular's existing shares and the Additional Tier 1 instruments were written down, while the Tier 2 instruments were converted into shares and acquired by Banco Santander for the price of €1.”

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