TEXT-S&P cuts 7 Portuguese financial institutions

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