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TEXT-S&P affirms Bank Vontobel at 'A+/A-1'
Overview -- We have observed a trend of rising residential real estate prices in Switzerland. -- Following a review of the Swiss banking sector, we still regard Bank Vontobel AG and Vontobel Holding AG as having low sensitivity to imbalances in the Swiss housing market. -- We are affirming our 'A+/A-1' ratings on Bank Vontobel and our 'A/A-1' ratings on Vontobel Holding. -- The negative outlook still reflects our belief that the bank will likely actively participate in market consolidation, weakening its currently strong capital position. We also anticipate continuous pressure, owing to likely subdued market activities. Rating Action On July 3, 2012, Standard & Poor's Ratings Services affirmed its 'A+' long-term counterparty credit ratings on Switzerland-based Bank Vontobel AG and its 'A' long-term counterparty credit ratings on Vontobel Holding AG. The 'A-1' short-term counterparty credit ratings on both entities were affirmed. The outlook remains negative. Rationale The rating affirmations follow our review of the Swiss banking industry. We have observed an increase of residential property prices in Switzerland over the past three years, which we believe represent a risk for those Swiss banks that have mainly domestic operations. If this trend continues, the growing economic imbalance may lead us to a more negative view of the economic environment in which Swiss banks operate and to lower our ratings by one notch (see "Outlook On Nine Swiss Banks To Negative On Exposure To Rising Property Prices; Ratings On All Swiss Banks Affirmed," published on July 3, 2012). However, Vontobel's sensitivity to imbalances in the Swiss housing market is, in our view, low. We therefore don't foresee a deterioration of the group's stand-alone credit profile as a result. Our ratings on Vontobel reflect its anchor of 'a', its moderate business position, strong capital and earnings, adequate risk position, average funding, and adequate liquidity. The stand-alone credit profile is 'a'. The ratings also factor in our view of the bank's "moderate" systemic importance to the Swiss Confederation (unsolicited ratings AAA/Stable/A-1+). Outlook The negative outlook still reflects our belief that the bank will likely actively participate in market consolidation, leading to a weakening of its currently strong capital position. The outlook also reflects our view that the bank's revenues will remain under pressure, owing to likely subdued market activities. We regard an upgrade as unlikely at this stage, given the group's current business and financial profiles. However, we might consider a positive rating action if we saw a significant nominal improvement in Vontobel's market position and regional diversification in international private banking and, as a result, a reduction of its reliance on market-sensitive income from its certificates business. Ratings Score Snapshot Issuer Credit Rating A+/Negative/A-1 Bank Holding Company Rating A/Negative/A-1 SACP a Anchor a Business Position Moderate (-1) Capital and Earnings Strong (+1) Risk Position Adequate (0) Funding and Liquidity Average and Adequate (0) Support 0 GRE Support 0 Group Support 0 Sovereign Support +1 Additional Factors 0 Related Criteria And Research -- Outlook On Nine Swiss Banks To Negative On Exposure To Rising Property Prices; Ratings On All Swiss Banks Affirmed, July 3, 2012 -- Banks: Rating Methodology And Assumptions, Nov. 9, 2011 -- Group Rating Methodology And Assumptions, Nov. 9, 2011 -- Banking Industry Country Risk Assessment Methodology And Assumptions, Nov. 9, 2011 -- Bank Capital Methodology And Assumptions, Dec. 6, 2010 Ratings List Ratings Affirmed Bank Vontobel AG Counterparty Credit Rating A+/Negative/A-1 Certificate Of Deposit A+/A-1 Vontobel Holding AG Counterparty Credit Rating A/Negative/A-1 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.
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