Sunday, January 16

Banco Santander, BBVA and Caixabank boast of S&P

Spanish banks close the quarter and go home for Christmas with good grades on their file, after Standard & Poor’s have improved the grades of both Santander Bank like BBVA and Caixabank.

Despite the improvement in the credit ratings of the three financial entities, Caixabank It stands out slightly in the race to be best in class by receiving a stable outlook for the future, compared to the negative outlook of its competitors in the industry.

All three banks, however, move around the spectrum of the notable low regarding the credit rating agency’s confidence in its ability to issue debt and meet its payments.

In the case of Caixabank, S&P has improved the ratings of debt issuance, both long-term and senior preferred from BBB+ to A-.

In BBVAMeanwhile, your long-term debt issuance note has risen to A from A-, surpassing the Caixabank in this sense, but seeing how its future outlook changes to negative, dragged down by the negative forecasts of the agency on Spanish public debt bonds.

Santander, finally, has seen how Standard & Poor’s it gives a rise to its valuation as an issuer of long-term debt that leaves the A to perch on the A +.

Santander progresses adequately

Standard & Poor’s attributes the good rating of Santander Bank the good use of its global diversification, its relatively higher profitability, in addition to prudent risk management and adequate capitalization.

Specifically, the agency believes that the bank will continue to generate sustainable operating income in the next two years, maintain superior efficiency (below 50 percent of the cost-income ratio) and a prudent provision of credit provisions.

The confidence of S&P lies in that Santander Bank You will achieve these goals to meet your strategic priorities, including a 9 percent return on equity and 8 percent return on equity improvement.

In addition, the agency highlights “the bank’s ability to maintain a buffer of redeemable instruments that is large enough to provide some protection to senior debt holders in a resolution scenario.”

The negative outlook of Santander Bank, on the other hand, “reflects that of the Spanish sovereign bond”, given that the agency does not contemplate rating the entity two notches above Spain, which retains its A note.

“We could downgrade the bank if the sovereign rating was lowered from Spain, which currently has a negative outlook “, explains the report of S&P.

S&P approves the purchase of Garanti

In the case of BBVA, S&P focuses on the strength and geographic diversification of BBVA, as well as on the profitability of its retail banking franchise, its good risk management and its “adequate capitalization”.

In the eyes of Standard & Poor’s, the acquisition of Garanti translates into a greater contribution to BBVA, for which an improvement of around 10 percent is expected in 2023, also supported by the cost savings achieved in Spain, and a reduction of credit provisions.

In the same way that it happens with Banco Santander, the negative outlook of BBVA reflects the Spanish sovereign credit rating, in addition to the opinion of S&P that “in a hypothetical scenario of default of the Spanish sovereign, it is unlikely that BBVA manage to avoid defaulting on your senior obligations. “

In this negative scenario, “the bank would face substantial losses and liquidity exits which, given the group’s exposure to its domestic market, would deplete its capital.” And despite the low probability of this happening, BBVA does feel the impact on the valuation of its prospects.

Caixabank achieves approval from all agencies

In the case of Caixabank, the improvement in the rating of its debt rating by Standard & Poor’s comes as a rubric to the maintenance of its note by Fitch y Moody’s, which give it a rating of BBB + and Baa1, respectively.

As reported by CaixaBank to the CNMV, this rating review has been carried out within the framework of the update of the analytical methodology of the S&P agency, which changed on December 9 and has been settled with a positive result for the 3 large Spanish banks .