TEXT-S&P cuts Rabobank Nederland ratings to 'AA-'

Overview
-- In our view, Dutch banks are exposed to the potential of a more
protracted downturn in The Netherlands and the wider eurozone.
-- We are therefore revising our economic risk score for The Netherlands
and our Banking Industry Country Risk Assessment to '3' from '2'.
-- As a result, we are lowering our long-term ratings on Cooperatieve
Centrale Raiffeisen-Boerenleenbank B.A. (Rabobank Nederland) and its
guaranteed subsidiaries to 'AA-' from 'AA'. We are affirming the short-term
ratings at 'A-1+'.
-- The stable outlook on Rabobank Nederland reflects our expectation that
the bank should be able to maintain a sound capital position and
better-than-average asset quality despite the difficult economic environment.

Rating Action
On Nov. 16, 2012, Standard & Poor's Ratings Services lowered its long-term
counterparty credit ratings on Cooperatieve Centrale Raiffeisen-Boerenleenbank
B.A. (Rabobank Nederland), and its guaranteed subsidiaries Rabohypotheekbank
N.V. and Rabobank New Zealand Ltd., to 'AA-' from 'AA'. At the same time, we
affirmed the 'A-1+' short-term ratings. We also lowered the ratings on
Rabobank Nederland's subordinated debt by one notch. The outlook is stable.

Rationale
The lowering of the long-term rating reflects our view of the impact of
moderately higher economic risks on Rabobank Nederland's stand-alone credit
profile (SACP). This follows our review of the Banking Industry Country Risk
Assessment (BICRA) on The Netherlands. Against the backdrop of a potentially
more protracted downturn in The Netherlands and wider eurozone, we have
revised our economic risk score for The Netherlands and our BICRA to '3' from
'2' (for more information, see "Various Rating Actions Taken On Dutch Banks
Due To Increased Economic Risks," published Nov. 16, 2012 on RatingsDirect on
the Global Credit Portal).

We have revised our assessment of systemwide risks that Dutch banks are
exposed to, which has led us to lower our anchor--or starting point for our
ratings--for commercial banks operating in The Netherlands, including Rabobank
Nederland, to 'bbb+' from 'a-'. As a result, we have also lowered our SACP for
the bank to 'a+' from 'aa-'.

We observe that the bank's performance has not been immune to some
deterioration domestically since mid-2011, particularly in certain portfolios
such as commercial real estate and certain small and midsize enterprise (SME)
sectors. However, we consider that Rabobank Nederland's overall position
continues to compare favorably to peers. This view underpins our assessment of
the bank's risk position, which remains "strong". Asset quality is underpinned
by the large domestic residential mortgage book, which represented 46% of
private sector lending at June 30, 2012, and has a long-term average bad debt
cost of about 5 basis points (bps).

Our ratings on Rabobank Nederland also continue to reflect our view of its
"very strong" business position. We base our view on the cooperative bank's
exceptional stability and resilience, prudent management and strategy, and
leading competitive position in its domestic market.

Our assessment of capital and earnings remains "adequate", based primarily on
our expectation that the bank's risk-adjusted capital (RAC) ratio before
adjustments, according to Standard & Poor's measures, will be in a 8.5%-9%
range in the next 18-24 months. We calculate that the bank's RAC ratio at the
end of 2011, pro forma our revised assessment of economic risk for the Dutch
system to '3' from '2', was 7.7%. We note management's cautious capital
policies and greater focus on its domestic market and the food and agriculture
sector internationally, which, combined with the absence of common dividends
due to its mutual status, should support our expectations for the bank's RAC
ratio.

We view Rabobank Nederland's funding as "average" and its liquidity position
as "adequate". As is common in the Dutch market, its loan-to-deposit ratio is
relatively high, at about 140% at June 30, 2012, despite its leadership
position in the domestic deposit market. The bank has maintained good access
to both public and private wholesale funding markets, in our view, and has
taken advantage of opportunities to extend the maturity profile of debt issues.

The long-term counterparty credit rating is one notch higher than the SACP,
reflecting our view that Rabobank Nederland has "high" systemic importance in
The Netherlands and the Dutch government is "supportive" of the banking
sector.

Outlook
The stable outlook on Rabobank Nederland reflects our expectation that the
bank should be able to maintain a sound capital position and
better-than-average asset quality despite the difficult economic environment.
The increased focus on its domestic business and food and agriculture sector
internationally is unlikely to affect our assessment of the bank's very strong
position.

We could raise the ratings if we consider it likely that the bank's RAC ratio
will increase beyond 10% in a sustainable manner. This could be triggered by
asset disposals or continued earnings retention combined with cautious balance
sheet management.

Conversely, we could lower the ratings if the bank's asset quality failed to
continue to outperform its peer group, or in the event of a major further
deterioration in economic conditions. If all bank-specific factors remained
the same, the ratings on Rabobank Nederland would not be affected if we were
to lower the long-term rating on The Netherlands to 'AA+' from 'AAA'.

Ratings Score Snapshot
Issuer Credit Rating AA-/Stable/A-1+

SACP a+
Anchor bbb+
Business Position Very Strong (+2)
Capital and Earnings Adequate (0)
Risk Position Strong (+1)
Funding and Liquidity Adequate (0)

Support +1
GRE Support 0
Group Support 0
Sovereign Support +1
Additional Factors 0

Related Criteria And Research
All articles listed below are available on RatingsDirect on the Global Credit
Portal, unless otherwise stated.
-- Various Rating Actions Taken On Dutch Banks Due To Increased Economic
Risks, Nov. 16, 2012
-- Banking Industry Country Risk Assessment: The Netherlands, Nov. 16,
2012
-- No Pain, No Gain: How The Housing Market Correction Is Affecting Dutch
Banks, June 27, 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 Hybrid Capital Methodology And Assumptions, Oct. 24, 2011
-- Bank Capital Methodology And Assumptions, Dec. 6, 2010

Ratings List
Downgraded; CreditWatch/Outlook Action; Ratings Affirmed
To From
Cooperatieve Centrale Raiffeisen-Boerenleenbank B.A. (Rabobank Nederland)
Rabobank New Zealand Ltd.
Counterparty Credit Rating AA-/Stable/A-1+ AA/Negative/A-1+

Downgraded; CreditWatch/Outlook Action
To From
Rabohypotheekbank N.V.
Counterparty Credit Rating AA-/Stable/-- AA/Negative/--

Downgraded
To From
Cooperatieve Centrale Raiffeisen-Boerenleenbank B.A. (Rabobank Nederland)
Rabobank Nederland (Hong Kong branch) (Unsolicited Ratings)
Certificate Of Deposit AA-/A-1+ AA/A-1+

Cooperatieve Centrale Raiffeisen-Boerenleenbank B.A. (Rabobank Nederland)
Senior Unsecured AA- AA
Subordinated A A+
Junior Subordinated A- A
Commercial Paper AA- AA

Rabo Capital Securities Ltd.
Junior Subordinated* A- A

Rabobank Capital Funding Trust II
Preferred Stock(4) A- A

Rabobank Capital Funding Trust III
Preferred Stock(4) A- A

Rabobank Capital Funding Trust IV
Preferred Stock(4) A- A

Rabobank Capital Funding Trust V
Preferred Stock(4) A- A

Rabobank Capital Funding Trust VI
Preferred Stock(4) A- A

Ratings Affirmed

Rabobank USA Financial Corp.
Counterparty Credit Rating --/--/A-1+

Cooperatieve Centrale Raiffeisen-Boerenleenbank B.A. (Rabobank Nederland)
Senior Unsecured cnAAA
Short-Term Debt A-1+
Certificate Of Deposit A-1+
Certificate Of Deposit cnA-1+
Certificate Of Deposit cnAAA
Commercial Paper A-1+

Rabo Australia Ltd.
Commercial Paper(4) A-1+

Rabobank Nederland (Australia Branch)
Commercial Paper A-1+

Rabobank USA Financial Corp.
Commercial Paper(4) A-1+
*Supported by Cooperatieve Centrale Raiffeisen-Boerenleenbank B.A. (Rabobank
Nederland).
(4)Guaranteed by Cooperatieve Centrale Raiffeisen-Boerenleenbank B.A. (Rabobank
Nederland).
N.B.-This 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.