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Fitch Corrects Certain Issue Level Ratings for Santander
September 27, 2017 / 4:19 PM / 2 months ago

Fitch Corrects Certain Issue Level Ratings for Santander

(The following statement was released by the rating agency) BARCELONA/PARIS/LONDON, September 27 (Fitch) Fitch Ratings has taken corrective action on certain issue level ratings for Banco Santander, S.A. (Santander). It has revised ratings on four issues to assign 'emr' suffixes following discovery of an error in the application of criteria with respect to these issues. The rating actions are as follows Suffixes of 'emr' have been assigned to the 'A-' ratings of the issues with ISIN numbers XS0350095666, XS0349986397, US059872AA90 and US059872AB73 to reflect embedded market risk in determination of their coupon amounts. KEY RATING DRIVERS Fitch identified the error with respect to these issue ratings as part of a review of financial institution issue ratings assigned prior to changes to criteria relating to structured notes in 2010 and 2011. The review followed discovery of the error with respect to another issuer's issue ratings. The applicable criteria were revised in August 2010 to adopt 'emr' suffixes and in August 2011 to no longer assign ratings to issues that were not principal-protected. The bonds with 'A-(emr)' ratings represent senior unsecured obligations issued by Santander and by its funding vehicle Santander International Products, PLC and guaranteed by Santander. Their ratings are aligned with Santander's Long-Term Issuer Default Rating (IDR). For the notes issued by the vehicle, the ratings reflect Fitch's view that Santander would be extremely likely to honor its commitment as guarantor if required, as the guarantees are unconditional, irrevocable and timely. Santander's Long-Term IDR is currently one notch above Spain's sovereign rating, reflecting diversification benefits from the bank's solid retail franchises in a number of European and Latin American countries, as well as the US, which translates into resilient profit generation and internal capital generation. Despite its international reach, Santander's risk profile remains correlated with that of the Spanish sovereign, including through macro-economic developments but also the stability and cost of market funding, which is linked to the perception of sovereign risk. See 'Fitch Affirms Santander at 'A-'; Outlook Stable' published on 27 July 2017 for further information. RATING SENSITIVITIES The ratings of the issues with ISIN numbers XS0350095666, XS0349986397, US059872AA90 and US059872AB73 are primarily sensitive to changes in Santander's Long-Term IDR. Santander's rating is capped at one notch above Spain's sovereign ratings. An upgrade of Santander's rating would be contingent on an upgrade of Spain's sovereign rating. This would have to be accompanied by further improved capital metrics and better asset quality, from a continued positive asset quality trend as per prior to the Banco Popular, S.A. (Popular) acquisition and the active reduction of a large stock of problem assets. Equally important will be an ability to preserve the earnings resilience of the group by delivering the planned cost synergies from the integration of Popular and maintaining sound earnings performance at major international subsidiaries. A downgrade of Spain's sovereign rating would trigger a downgrade of the bank's rating. Downward rating pressure could also arise from a slower improvement in asset quality than currently anticipated by Fitch, a substantial weakening of earnings, which we view as unlikely, or unexpected execution and integration risks emerging from Popular's acquisition that could compromise the delivery of the group's financial targets for 2018. Contact: Primary Analyst Cristina Torrella Senior Director +34 93 323 8405 Fitch Ratings Espana, S.A.U. Av. Diagonal, 601, 2nd Floor 08028 Barcelona Secondary Analyst Josu Fabo Senior Director +34 93 494 3464 Committee Chairperson Olivia Perney Guillot Senior Director +33 1 44 29 9174 Media Relations: Peter Fitzpatrick, London, Tel: +44 20 3530 1103, Email: peter.fitzpatrick@fitchratings.com. Additional information is available on www.fitchratings.com Applicable Criteria Global Bank Rating Criteria (pub. 25 Nov 2016) here Additional Disclosures Solicitation Status here#solicitation Endorsement Policy here ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEB SITE AT WWW.FITCHRATINGS.COM. PUBLISHED RATINGS, CRITERIA, AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE, AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE CODE OF CONDUCT SECTION OF THIS SITE. DIRECTORS AND SHAREHOLDERS RELEVANT INTERESTS ARE AVAILABLE here. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE. Copyright © 2017 by Fitch Ratings, Inc., Fitch Ratings Ltd. and its subsidiaries. 33 Whitehall Street, NY, NY 10004. Telephone: 1-800-753-4824, (212) 908-0500. Fax: (212) 480-4435. Reproduction or retransmission in whole or in part is prohibited except by permission. All rights reserved. In issuing and maintaining its ratings and in making other reports (including forecast information), Fitch relies on factual information it receives from issuers and underwriters and from other sources Fitch believes to be credible. Fitch conducts a reasonable investigation of the factual information relied upon by it in accordance with its ratings methodology, and obtains reasonable verification of that information from independent sources, to the extent such sources are available for a given security or in a given jurisdiction. The manner of Fitch’s factual investigation and the scope of the third-party verification it obtains will vary depending on the nature of the rated security and its issuer, the requirements and practices in the jurisdiction in which the rated security is offered and sold and/or the issuer is located, the availability and nature of relevant public information, access to the management of the issuer and its advisers, the availability of pre-existing third-party verifications such as audit reports, agreed-upon procedures letters, appraisals, actuarial reports, engineering reports, legal opinions and other reports provided by third parties, the availability of independent and competent third- party verification sources with respect to the particular security or in the particular jurisdiction of the issuer, and a variety of other factors. Users of Fitch’s ratings and reports should understand that neither an enhanced factual investigation nor any third-party verification can ensure that all of the information Fitch relies on in connection with a rating or a report will be accurate and complete. Ultimately, the issuer and its advisers are responsible for the accuracy of the information they provide to Fitch and to the market in offering documents and other reports. In issuing its ratings and its reports, Fitch must rely on the work of experts, including independent auditors with respect to financial statements and attorneys with respect to legal and tax matters. Further, ratings and forecasts of financial and other information are inherently forward-looking and embody assumptions and predictions about future events that by their nature cannot be verified as facts. As a result, despite any verification of current facts, ratings and forecasts can be affected by future events or conditions that were not anticipated at the time a rating or forecast was issued or affirmed. The information in this report is provided “as is” without any representation or warranty of any kind, and Fitch does not represent or warrant that the report or any of its contents will meet any of the requirements of a recipient of the report. A Fitch rating is an opinion as to the creditworthiness of a security. This opinion and reports made by Fitch are based on established criteria and methodologies that Fitch is continuously evaluating and updating. Therefore, ratings and reports are the collective work product of Fitch and no individual, or group of individuals, is solely responsible for a rating or a report. The rating does not address the risk of loss due to risks other than credit risk, unless such risk is specifically mentioned. Fitch is not engaged in the offer or sale of any security. All Fitch reports have shared authorship. Individuals identified in a Fitch report were involved in, but are not solely responsible for, the opinions stated therein. The individuals are named for contact purposes only. A report providing a Fitch rating is neither a prospectus nor a substitute for the information assembled, verified and presented to investors by the issuer and its agents in connection with the sale of the securities. Ratings may be changed or withdrawn at any time for any reason in the sole discretion of Fitch. Fitch does not provide investment advice of any sort. Ratings are not a recommendation to buy, sell, or hold any security. Ratings do not comment on the adequacy of market price, the suitability of any security for a particular investor, or the tax-exempt nature or taxability of payments made in respect to any security. Fitch receives fees from issuers, insurers, guarantors, other obligors, and underwriters for rating securities. Such fees generally vary from US$1,000 to US$750,000 (or the applicable currency equivalent) per issue. In certain cases, Fitch will rate all or a number of issues issued by a particular issuer, or insured or guaranteed by a particular insurer or guarantor, for a single annual fee. Such fees are expected to vary from US$10,000 to US$1,500,000 (or the applicable currency equivalent). The assignment, publication, or dissemination of a rating by Fitch shall not constitute a consent by Fitch to use its name as an expert in connection with any registration statement filed under the United States securities laws, the Financial Services and Markets Act of 2000 of the United Kingdom, or the securities laws of any particular jurisdiction. Due to the relative efficiency of electronic publishing and distribution, Fitch research may be available to electronic subscribers up to three days earlier than to print subscribers. For Australia, New Zealand, Taiwan and South Korea only: Fitch Australia Pty Ltd holds an Australian financial services license (AFS license no. 337123) which authorizes it to provide credit ratings to wholesale clients only. Credit ratings information published by Fitch is not intended to be used by persons who are retail clients within the meaning of the Corporations Act 2001

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