(Repeat for additional subscribers)
April 14 (The following statement was released by the rating agency)
Fitch Ratings has affirmed Spain-based Caja de Ahorros y Pensiones de Barcelona
(La Caixa)'s Long-term Issuer Default Rating (IDR) at 'BBB-', with a Negative Outlook,
Short-term IDR at 'F3' and Viability Rating (VR) at 'bbb-'. A full list of rating actions is at
the end of this rating action commentary.
The affirmation follows Fitch's assessment of the implications for La Caixa's
credit profile following the announcement made by the bank's board of directors
on 10 April 2014 regarding i) conversion of La Caixa into a banking foundation,
to comply with the 27 December 2013 law on savings banks and banking
foundations; and ii) transfer of La Caixa's stake in CaixaBank, S.A.
(BBB/Negative) and its debt (except that linked to social projects) to Criteria
CaixaHolding, S.A.U. (Criteria), a wholly-owned holding company. As a result, La
Caixa will lose its banking license, although it will continue to be supervised
by the Bank of Spain given its indirect shareholding interest in CaixaBank
The reorganisation is subject to receipt of all necessary governing body, legal
and regulatory approvals; and is scheduled to be completed in 4Q14.
CaixaBank's ratings are unaffected by the group reorganisation and remain
sensitive to the factors noted in previous rating action commentaries (see
"Fitch Affirms 8 Spanish Banks Following Sovereign Review", dated 8 November
2013 at www.fitchratings.com).
KEY RATING DRIVERS - IDRS AND VR
La Caixa is a bank holding company and its IDRs are driven by its financial
strength, as expressed by the VR. La Caixa's VR is based on those of its
60.5%-owned CaixaBank as Fitch considers this the group's main operating
subsidiary. La Caixa's VR is one notch below CaixaBank's largely due to: i) a
future reduction of the stake to 55.9%, after conversions of mandatory
convertibles of CaixaBank and exchangeable bonds of La Caixa; and ii) a
double-leverage ratio, which according to Fitch's definitions is between
moderate and high. The Outlook is Negative reflecting that on CaixaBank.
La Caixa's outstanding debt totals EUR7.9bn. It is mainly subordinated, held by
retail investors and falling due between 2017 and 2020. Following the
reorganisation, the bulk of this debt will be transferred to Criteria. Criteria
also has EUR1.6bn of senior debt largely maturing in 2020. Taking this debt into
account, Fitch estimates La Caixa's double-leverage ratio to be roughly 125%.
La Caixa's liquidity position is managed in conjunction with Criteria's and
Fitch views it as adequate considering the current rating. Its debt-servicing
ability relies upon cash flows received from CaixaBank and to a lesser extent
from stakes held by Criteria, the most important being a 34.5% share in Gas
Natural SDG, S.A. (BBB+/Stable) and a 19.2% share in Abertis Infraestructuras,
S.A. (BBB+/Negative) at end-2013. These investments have a track record of
providing stable dividends to Criteria (and hence La Caixa) to date. In
addition, Criteria holds a portfolio of less liquid equity stakes and legacy
real estate assets. Fitch is of the opinion that the reorganisation plans may be
slightly beneficial for unsecured creditors of La Caixa as they will be closer
to Criteria's assets.
RATING SENSITIVITIES - IDRS AND VR
La Caixa's VR (and consequently IDRs) is sensitive to the factors which might
drive a change in CaixaBank's VR. Its ratings could also be affected by higher
double-leverage, a strong decline in the valuation of its assets and/or a
weakening of its debt-servicing capabilities. However, Fitch views any of these
factors as unlikely in the foreseeable future.
Should the reorganisation go ahead as planned, Fitch will withdraw La Caixa's VR
and IDRs upon closing. Fitch may simultaneously assign new ratings to Criteria,
which are likely to be at the same level as those of La Caixa, absent any
unforeseen changes in the organisational structure, funding profile and/or
KEY RATING DRIVERS AND SENSITIVITES - SUPPORT RATING AND SUPPORT RATING FLOOR
La Caixa's Support Rating of '5' and Support Rating Floor (SRF) of 'NF' reflect
Fitch's belief that support cannot be relied upon as it is a bank holding
company, rather than a deposit-taker. Upon the completion of the reorganisation,
Fitch will withdraw La Caixa's Support Rating and SRF.
KEY RATING DRIVERS AND SENSITIVITIES - SUBORDINATED DEBT
La Caixa's subordinated debt issues are notched down once from its VR due to
above-average loss severity for this sort of instrument when compared with
average recoveries. The debt ratings have been affirmed in line with the
affirmation of the VR and are sensitive to changes in CaixaBank's VR and hence
La Caixa's. As part of the reorganisation, these instruments will be transferred
to Criteria. Should this occur, Fitch may transfer these debt ratings to
Criteria. Fitch does not expect the subordinated debt ratings to change
following the transfer and upon Criteria becoming the obligor.
The rating actions are as follows:
Long-term IDR: affirmed at 'BBB-'; Outlook Negative
Short-term IDR: affirmed at 'F3'
Viability Rating: affirmed at 'bbb-'
Support Rating: affirmed at '5'
Supporting Rating Floor: affirmed at 'No Floor'
Subordinated debt: affirmed at 'BB+'
State-guaranteed debt: affirmed at 'BBB'