TEXT - S&P affirms CaixaBank S.A. ratings

Thu Nov 29, 2012 1:05pm EST

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(The following statement was released by the rating agency)

Overview

     -- On Nov. 27, 2012, CaixaBank S.A. announced that the governing 
committee of Spain's Fondo de Reestructuracion Ordenada Bancaria (FROB) has 
accepted its offer to acquire all of the shares the FROB holds in Banco de 
Valencia (BdV) for a total consideration of EUR1. 
     -- In our view the terms of the transaction, which include the transfer 
of riskier assets to an external company, the recapitalization of BdV before 
the acquisition, and an asset protection scheme on a sizeable part of BdV's 
loan book, significantly reduce the downside risk we saw to Caixabank's 
financial profile.  
     -- We are affirming our 'BBB-/A-3' long- and short-term ratings on 
Caixabank and our 'BB/B' long- and short-term ratings on its parent company 
Caja de Ahorros y Pensiones de Barcelona (la Caixa).  
     -- The outlook remains negative reflecting that on Spain. It also 
reflects our view that the difficult economic and operating conditions in 
Spain could lead to a deterioration of Caixabank's stand-alone credit profile. 


Rating Action


On Nov. 29, 2012, Standard & Poor's Ratings Services affirmed its 'BBB-/A-3' 
long- and short-term counterparty credit ratings on Spain's CaixaBank S.A. and 
its 'BB/B' long- and short-term counterparty credit ratings on its parent 
company Caja de Ahorros y Pensiones de Barcelona (la Caixa). The outlooks 
remain negative.  


Rationale

The rating actions follow Caixabank's announcement that the governing 
committee of the Fondo de Reestructuracion Ordenada Bancaria (FROB) has 
accepted its offer to acquire all of the shares the FROB holds in Banco de 
Valencia (BdV) for a total consideration of EUR1. 

The affirmation reflects our view that the acquisition will have a limited 
impact on Caixabank's financial profile. This is thanks to the terms of the 
agreement reached by Caixabank with the Spanish authorities, which include 
BdV's EUR4.5 billion recapitalization before the acquisition, the transfer of 
riskier real estate-related assets to an external company, and an asset 
protection scheme on part of BdV's loan book. Specifically, the scheme would 
cover up to 72.5% of any losses on BdV's small and midsize enterprise (SME) 
portfolio and contingent risk portfolio (guarantees), once any existing 
provisions covering these assets have been applied. We also note that the 
acquired entity is small, as prior to the transfer of riskier assets, BdV's 
loan portfolio accounts for about 7% of Caixabank's consolidated loan book. 

The Spanish authorities have also agreed that holders of subordinated debt and 
hybrids will absorb losses. Prior to the completion of the transaction, BdV's 
real estate exposures will also be transferred to SAREB (Spain's "bad bank") 
and will therefore not be acquired by Caixabank. 

In our view, the terms of the agreement substantially mitigate the risk of any 
potential losses resulting from the acquired assets. Consequently, the 
agreement should help protect Caixabank's solvency and asset quality. In this 
context, we anticipate that the acquisition will not significantly affect 
Caixabank's capital position. This is also because we believe that the 
potential losses that might arise from the remaining portfolio not covered by 
an asset protection scheme would likely be covered by BdV's capital once it is 
enhanced by FROB's capital injection. 

In our view, the size of the acquisition is small relative to Caixabank's 
consolidated balance sheet. Prior to the transfer of riskier assets to SAREB, 
BdV's loan portfolio accounts for about 7% of Caixabank's consolidated loan 
book. Moreover, on the date of the acquisition, once real estate assets are 
transferred to SAREB, BdV's loan portfolio will reduce further. 

We also think that the impact of the acquisition on Caixabank's funding 
profile will be manageable, as we estimate that, following the asset transfer 
to SAREB, BdV's deposits will almost cover its loans. 

In our view, the transaction will not have any significant impact on 
Caixabank's business position. We also think that the integration of BdV and 
the completion of the restructuring to which the entity is committed will not 
represent a significant managerial challenge for Caixabank owing to BdV's 
relatively small size.  

Outlook

The negative outlook on Caixabank primarily mirrors that on the long-term 
rating on Spain. A downgrade of the sovereign would very likely trigger a 
similar action on Caixabank as we rarely rate financial institutions above our 
long-term sovereign rating on their countries of domicile due to the strong 
connection between banks' creditworthiness and that of their country of 
domicile. 

The negative outlook also reflects the possibility that we could revise 
downward Caixabank's stand-alone credit profile (SACP)--and hence lower the 
rating--if the operating environment in Spain became even more difficult than 
we currently forecast. We might also consider lowering Caixabank's SACP if the 
bank's asset quality deteriorated faster than we currently anticipate and at 
levels closer to the domestic banking sector average. We could also lower our 
assessment of Caixabank's SACP if credit losses exceeded the bank's capacity 
to absorb losses and impaired its solvency position, triggering a lowering of 
its risk-adjusted capital ratio to a weaker level than we currently 
incorporate in the ratings. 

We currently view an outlook revision to stable as unlikely in the next 12-18 
months. We could revise the outlook to stable if we revised our outlook on 
Spain to stable, if economic and operating conditions in Spain improved, and 
if Caixabank preserved its financial profile through the downturn.

The negative outlook on the long-term rating on la Caixa mirrors that on the 
group's core operating entity, Caixabank. A downgrade of Caixabank would 
trigger a similar action on la Caixa.

Ratings Score Snapshot
Issuer Credit Rating       BBB-/Negative/A-3

SACP                       bbb- 
 Anchor                    bb+ 
 Business Position         Strong [+1]
 Capital and Earnings      Weak  
 Risk Position             Strong [+1]
 Funding                   Above Average 
 Liquidity                 Adequate 

Support                    0
 GRE Support               0 
 Group Support             0 
 Sovereign Support         0 

Additional Factors         0 


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 Capital Methodology And Assumptions, Dec. 6, 2010
     -- Analytical Approach To Assessing Nonoperating Holding Companies, March 
17, 2009


Ratings List
Ratings Affirmed

CaixaBank S.A.
 Counterparty Credit Rating             BBB-/Negative/A-3  
 Senior Unsecured                       BBB-               
 Preferred Stock                        BB-                

Caja de Ahorros y Pensiones de Barcelona
 Counterparty Credit Rating             BB/Negative/B      
 Certificate Of Deposit                 BB/B                 
 Subordinated                           B+                 
 Commercial Paper                       B                  

Caixa Preference Ltd.
 Preferred Stock*                       BB-                

*Guaranteed by CaixaBank S.A.

 (Caryn Trokie, New York Ratings Unit)
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