DBRS Lowers Caixa Geral de Depósitos to BBB (low) After Downgrade of Portugal to BBB (low)

DBRS, Inc. (DBRS) has today downgraded the ratings of Caixa Geral de Depósitos, S.A. (CGD or the Group) following the downgrade of the Republic of Portugal. DBRS has downgraded CGD’s Senior Long-Term Debt & Deposit rating to BBB (low) from BBB and the Short-Term Debt & Deposit rating to R-2 (mid) from R-2 (high). The trend on all ratings remains Negative. These rating actions follow DBRS’s downgrade of the Republic of Portugal to BBB (low) from BBB, with the trend remaining Negative.

DBRS also lowered the Group’s intrinsic assessment (IA) to BBB (low) from BBB. As the largest banking group in Portugal with 100% ownership by the Republic of Portugal, DBRS views CGD as inextricably linked to the sovereign. As such, the sustained stress on the sovereign is putting downward pressure on the final rating, as well as the intrinsic strength of the Group.

In light of this sovereign rating action, upcoming bank earnings, and the condition of the financial sector, DBRS will continue to evaluate the intrinsic strength of the Group. DBRS maintains its SA-2 support assessment for CGD, which indicates an expectation of timely systemic support in case of need. However, with the current rating for the Portuguese sovereign at BBB (low), which is equal to the intrinsic assessment for CGD, there is currently no uplift to the Group’s ratings.

Notes:
All figures in Euros (EUR) unless otherwise noted.

The principal applicable methodology is the Global Methodology for Rating Banks and Banking Organisations. Other methodologies used include the DBRS Criteria – Intrinsic and Support Assessments. Both can be found on the DBRS website under Methodologies.

The sources of information used for this rating include DBRS's rating action on the Republic of Portugal, company documents and SNL Financial. DBRS considers the information available to it for the purposes of providing this rating was of satisfactory quality.

Lead Analyst: Roger Lister
Rating Committee Chair: Alan G. Reid
Initial Rating Date: 23 December 2011
Most Recent Rating Update: 23 December 2011

This credit rating has been issued outside the European Union (EU) and may be used for regulatory purposes by financial institutions in the EU.

For additional information on this rating, please refer to the linking document under Related Research.