TEXT-S&P cuts 7 Portuguese financial institutions

Tue Feb 14, 2012 5:44pm EST

Feb 14 - Standard & Poor's Ratings Services said today that it lowered
its ratings on seven Portugal-based financial institutions. Standard & Poor's
also removed these ratings from CreditWatch with negative implications, where
they were placed on Dec. 7, 2011, or Jan. 31, 2012. The outlook on the long-term
ratings is negative.	
     The rating actions follow the lowering of the long- and short-term 	
sovereign credit ratings on the Republic of Portugal (BB/Negative/B; see 	
"Portugal's Ratings Lowered To 'BB/B'; Recovery Rating Of 4 Assigned; Outlook 	
Negative," published Jan. 13, 2012, on RatingsDirect on the Global Credit 	
Portal) and our subsequent revision of our Banking Industry Country Risk 	
Assessment (BICRA) on Portugal to group '7' from group '5'. The revision of 	
the BICRA was the result of our revision of the economic risk score to '7' 	
from '6' and of the industry risk score to '6' from '5') (see "BICRA On 	
Portugal Revised To Group '7' From Group '5' Following Sovereign Downgrade," 	
published Feb. 14, 2012).	
     We lowered our long-term counterparty credit ratings on Banco Santander 	
Totta S.A., Banco BPI S.A. (BPI), BPI's core subsidiary Banco Portugues de 	
Investimento S.A., Caixa Geral de Depositos S.A. (CGD), and Banco Comercial 	
Portugues S.A. (Millennium bcp) by two notches. In addition, we lowered our 	
long-term counterparty credit ratings on Banco Espirito Santo S.A. (BES) and 	
its core subsidiary, Banco Espirito Santo de Investimento S.A. (BESI), by one 	
notch.	
     The downgrade of Santander Totta solely reflects the downgrade of the 	
sovereign ratings. The downgrades of the remaining rated banks mainly reflect 	
the lowering of our assessments of the bank's stand-alone credit profiles 	
(SACPs) by either one or two notches following our BICRA revision and the 	
change of the anchor we apply to banks operating primarily in Portugal to 'bb' 	
from 'bbb-'. (We determine a bank's anchor based on our calculation of the 	
weighted average of the economic risk scores of the countries where the bank 	
operates and the industry risk score of the bank's country of domicile; see 	
"Banks: Rating Methodology And Assumptions" for definition.)	
     We downgraded Santander Totta by two notches as a result of the lowering 	
of the sovereign rating by two notches. Although we believe that Santander 	
Totta is a highly strategically important subsidiary for its parent, Banco 	
Santander S.A. (A+/Negative/A-1), we limit the rating on Santander Totta at 	
the level of the foreign-currency long-term rating on Portugal.	
     We lowered our ratings on BPI, BPI's core subsidiary Banco Portugues de 	
Investimento S.A., and Millennium bcp by two notches based on the lowering of 	
the anchor for Portuguese banks by two notches and on our lower capital and 	
earnings assessment of "weak" rather than "moderate," as our criteria define 	
those terms.	
     We lowered the ratings on CGD by two notches. We revised our SACP on CGD 	
by only one notch as opposed to the two-notch revision on the anchor. This is 	
because, in accordance with our criteria, once the anchor for a bank is 	
lowered to the speculative-grade category, the adjustment we make for a weak 	
capital and earnings assessment on a bank is only one notch rather the 	
previous two when determining the bank's SACP. We have also reduced the 	
notches of uplift we factor into the long-term rating on CGD above the SACP 	
for government support to one from two.	
     We lowered our ratings on BES and BESI by one notch owing to our revision 	
of the SACP. We revised our SACP on BES by only one notch as opposed to the 	
two-notch revision on the anchor applied to Portuguese banks. This is because, 	
in accordance with our criteria, once the anchor for a bank falls to the 	
speculative-grade category, a "moderate" assessment of its capital and 	
earnings becomes a neutral factor for its SACP.	
     The negative outlooks on our long-term ratings on BES, BESI, BPI, Banco 	
Portugues de Investimento, and Millennium bcp reflect Portugal's tough 	
economic and financial landscape ahead, which could prompt us to lower our 	
SACP assessments on the banks. The negative outlooks on the long-term ratings 	
on Santander Totta and CGD reflect the negative outlook on the long-term 	
rating on Portugal.	
     See the ratings list below for ratings on these financial institutions 	
and their relevant subsidiaries. We will publish individual research updates 	
on banks identified below, as well as the ratings by debt type: senior, 	
subordinated, junior subordinated, and preferred stock.	
 	
RELATED CRITERIA AND RESEARCH	
     -- Banks: Rating Methodology And Assumptions, Nov. 9, 2011	
     -- Banking Industry Country Risk Assessment Methodology And Assumptions, 	
Nov. 9, 2011	
     -- Group Rating Methodology And Assumptions, Nov. 9, 2011	
     -- Bank Hybrid Capital Methodology And Assumptions, Nov. 1, 2011	
     -- BICRA On Portugal Revised To Group '7' From Group '5' Following 	
Sovereign Downgrade, Feb. 14, 2012 	
     -- Portugal's Ratings Lowered To 'BB/B'; Recovery Rating Of 4 Assigned; 	
Outlook Negative, Jan. 13, 2012 	
	
RATINGS LIST	
 	
The ratings below are counterparty credit ratings.	
	
Downgraded; CreditWatch Action	
                                      To                 From	
Banco Santander Totta S.A.	
 Counterparty Credit Rating           BB/Negative/B      BBB-/Watch Neg/A-3	
	
Downgraded; CreditWatch Action; Ratings Affirmed	
	
Caixa Geral de Depositos S.A.	
 Counterparty Credit Rating           BB-/Negative/B     BB+/Watch Neg/B	
	
Banco Comercial Portugues S.A.	
 Counterparty Credit Rating           B+/Negative/B      BB/Watch Neg/B	
	
Banco BPI S.A.	
 Counterparty Credit Rating           BB-/Negative/B     BB+/Watch Neg/B	
	
Banco Portugues de Investimento S.A.	
 Counterparty Credit Rating           BB-/Negative/B     BB+/Watch Neg/B	
	
Banco Espirito Santo S.A.	
 Counterparty Credit Rating           BB-/Negative/B     BB/Watch Neg/B	
	
Banco Espirito Santo de Investimento S.A.	
 Counterparty Credit Rating           BB-/Negative/B     BB/Watch Neg/B	
	
NB. This list does not include all ratings affected.	
	
	
	
Complete ratings information is available to subscribers of RatingsDirect on 	
the Global Credit Portal at www.globalcreditportal.com. All ratings affected 	
by this rating action can be found on Standard & Poor's public Web site at 	
www.standardandpoors.com. Use the Ratings search box located in the left 	
column.  Alternatively, call one of the following Standard & Poor's numbers: 	
Client Support Europe (44) 20-7176-7176; London Press Office (44) 	
20-7176-3605; Paris (33) 1-4420-6708; Frankfurt (49) 69-33-999-225; Stockholm 	
(46) 8-440-5914; or Moscow 7 (495) 783-4009.	
	
Primary Credit Analyst: Alicia  Fernandez, Madrid (34) 91-788-7205;	
                        alicia_fernandez@standardandpoors.com
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