December 4, 2012 / 6:06 PM / in 5 years

TEXT-S&P puts Ibercaja Banco 'BB+' rating on watch negative

     -- On Nov. 29, 2012, the board of directors of Caja de Ahorros y Monte de 
Piedad de Zaragoza, Aragon y Rioja, the savings bank that owns Spain-based 
Ibercaja Banco S.A. (iberCaja), said iberCaja might acquire Banco Grupo 
Cajatres, S.A.
     -- We are placing our 'BB+' long-term counterparty credit rating on 
iberCaja on CreditWatch negative and affirming our 'B' short-term rating. 
     -- The CreditWatch placement reflects the possibility that we might lower 
the ratings on iberCaja by one notch if we decided that the acquisition 
weakened our view of iberCaja's creditworthiness.

Rating Action
On Dec. 4, 2012, Standard & Poor's Ratings Services placed its 'BB+' long-term 
counterparty credit rating on Ibercaja Banco S.A. (iberCaja) on CreditWatch 
with negative implications and affirmed its 'B' short-term rating. At the same 
time, we placed all issue ratings on CreditWatch negative.

The CreditWatch placement follows iberCaja's shareholders' announcement of a 
potential agreement to acquire Spain-based Banco Grupo Cajatres (not rated), 
and reflects our view that the acquisition could weaken iberCaja's standalone 
credit profile (SACP), and in particular its credit risk profile. Approval 
from Spanish and European authorities, and the general assemblies of the 
savings banks that own iberCaja and Cajatres is still pending. The agreement 
is also subject to approval by the authorities overseeing Cajatres's 
restructuring plan and capital support from the government, and the 
implementation of the conditionality attached to state aid. We believe that 
the acquisition could be concluded by the end of the first quarter of 2013.

We believe that the acquisition of Cajatres would reinforce iberCaja's leading 
market position in its core markets in the northern Spanish regions of Aragon 
and La Rioja, and the province of Guadalajara. A merged group would also have 
strong market shares in the regions of Castilla Leon and Extremadura. However, 
the combined entity would account for less than 3% of the Spanish banking 
system's loans and about 4% of its deposits as it would still be smaller than 
large domestic peers.

We currently believe that iberCaja's asset quality and credit loss experience 
is better than the system average. We understand that the potential 
acquisition of Cajatres would take place after the transfer of most of its 
real estate exposures to the Spanish asset management company for assets from 
the restructuring of the banking system. However, we think that the asset 
quality and the size of Cajatres's remaining loan book, which we estimate 
represented more than 30% of iberCaja's portfolio at the end of June 2012, 
could potentially weaken our view of iberCaja's risk position as "strong." 

We also think that if the acquisition went ahead our assessment of iberCaja's 
capital and earnings would likely remain unchanged. This is because we believe 
the transaction will probably have a limited impact on iberCaja's regulatory 
capital ratios. iberCaja is already taking specific measures to reinforce its 
capital--prior to any acquisition--to cover the higher minimum capital 
requirements. Additionally, our current risk-adjusted capital (RAC) ratio 
projection of 4%-4.5% by the end of 2013 provides a cushion within the 3%-5% 
standard range of our "weak" capital assessment. However, iberCaja has not yet 
announced what form of capital it will use to finance the transaction.

We also think that the impact of the acquisition on our assessment of 
iberCaja's funding and liquidity would likely be limited because of Cajatres's 
more balanced funding structure--its loan to deposit ratio is better than 
iberCaja's. Moreover, following the transfer of the real estate assets to the 
Spanish asset management company, Cajatres will likely receive liquid 
securities that are eligible for discount at the European Central Bank (ECB; 

We aim to resolve the CreditWatch placement on completion of the transaction 
and after we review a complete set of business and financial information on 
Cajatres and the combined group. 

We will assess the impact of the acquisition on iberCaja's financial profile, 
especially on its risk position. If as a result we were to lower our 
assessment of iberCaja's SACP by one notch, this could trigger a similar 
downgrade of the bank. If we saw no negative impact on iberCaja's SACP, we 
could affirm the ratings at their current level.

We might also affirm our ratings on iberCaja and remove them from CreditWatch 
if the acquisition was not finally completed, and if our view of iberCaja's 
SACP remained unchanged despite the strategic challenges it faces in the 
increasingly consolidated financial system.

Ratings Score Snapshot
Issuer Credit Rating                  BB+/Watch Neg/B   

SACP                                  bb+  
  Anchor                              bb+   
  Business Position                   Adequate (0)  
  Capital and Earnings                Weak (-1) 
  Risk Position                       Strong (+1)  
  Funding and Liquidity               Average and Adequate (0) 

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
     -- Use Of CreditWatch And Outlooks, Sept. 14, 2009
     -- Criteria For Assigning 'CCC+', 'CCC', 'CCC-', And 'CC' Ratings, Oct. 
1, 2012

Ratings List
Ratings Affirmed; CreditWatch/Outlook Action
                                        To                 From
Ibercaja Banco S.A.
 Counterparty Credit Rating             BB+/Watch Neg/B    BB+/Negative/B
 Certificate Of Deposit                 BB+/Watch Neg/B    BB+/B
 Subordinated                           BB-/Watch Neg      BB-
 Preferred Stock                        CCC-/Watch Neg     CCC-

Complete ratings information is available to subscribers of RatingsDirect on 
the Global Credit Portal at All ratings affected 
by this rating action can be found on Standard & Poor's public Web site at Use the Ratings search box located in the left 
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