Fitch Affirms Support Rating and Withdraws Banco Santander's (Mexico) 'BBB-' Support Rating Floor

Thu Jun 5, 2014 1:42pm EDT

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(The following statement was released by the rating agency) MONTERREY, June 05 (Fitch) Fitch Ratings has today affirmed Banco Santander (Mexico) (SAN Mexico) Support Rating (SR) at '2' and withdrawn the SRF of Banco Santander (Mexico) (SAN Mexico) of 'BBB-' . See the full list of rating actions at the end of this rating action commentary. KEY RATING DRIVERS The support rating affirmation of SAN Mexico at '2' reflects Fitch's view that there is high probability of support to SAN Mexico from SAN, if needed. The withdrawal of SAN Mexico's SRF reflects Fitch's view that parent support, if needed, is now more likely than sovereign support, given the recent upgrade of its parent (Spain's Banco Santander (SAN), upgraded to 'A-' from 'BBB+' on May 29, 2014). As per Fitch's criteria, SRFs are assigned to commercial and policy banks where Fitch believes the most likely source of potential extraordinary support is government authorities, rather than the bank's shareholders. The previous SRF of SAN Mexico was assigned at a time when the parent was under considerable rating downward pressure due to Spain's sovereign rating. Therefore, Fitch assigned this SRF to indicate the level below which the agency would not lower the bank's IDRs due to the propensity of sovereign support, given the bank's systemic importance. Since the rating trend of the parent has reversed and Fitch now believes that parent support is more likely than sovereign support, Fitch considers that the sovereign-driven SRF is no longer relevant. RATING SENSITIVITIES The support of SAN Mexico could be revised upward if the parent rating is further upgraded. On the other side, Fitch considers that there is limited downside potential for this rating, even in the event of a deterioration of the parent's capacity to provide support, since the sovereign would likely maintain a high probability of support in that event, due to SAN Mexico's high systemic importance. The rating actions are as follows: SAN Mexico --Support Rating affirmed at '2'; --Support Rating Floor withdrawn at 'BBB-'. Contact: Primary Analyst Monica Ibarra Director +52 818 399 9150 Fitch Mexico, S.A. de C.V. Prol. Alfonso Reyes 2612 64920 Monterrey, Mexico Secondary Analyst Alejandro Garcia Senior Director, CFA +52 818 399 9146 Committee Chairperson Franklin Santarelli Managing Director +1 212 908 0739 Media Relations: Elizabeth Fogerty, New York, Tel: +1 (212) 908 0526, Email: elizabeth.fogerty@fitchratings.com. Additional information is available on www.fitchratings.com Applicable criteria and Related Research: --'Global Financial Institutions Rating Criteria' (Jan. 31, 2014) --'Rating FI Subsidiaries and Holding Companies' (Aug. 10, 2012) --'National Scale Ratings Criteria' (Oct. 30, 2013) Applicable Criteria and Related Research: National Scale Ratings Criteria here Rating FI Subsidiaries and Holding Companies here Global Financial Institutions Rating Criteria here Additional Disclosure Solicitation Status here ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

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