DBRS Downgrades Targobank to A (low) After Downgrade of BPE, Trend Now Neg.

DBRS, Inc. (DBRS) has today downgraded the ratings of Targobank following the downgrade of one of its parents, Banco Popular Español S.A. (Popular). Targobank is a Spanish bank that was created in 2010 as a joint venture by Popular and Groupe Crédit Mutuel–CIC (Crédit Mutuel) that is jointly controlled and owned by both Crédit Mutuel and Popular. DBRS has downgraded Targobank’s Senior Long-Term Debt & Deposit rating to A (low) from A (high) and Short-Term Debt & Deposit rating to R-1 (low) from R-1 (middle). The trend on all long-term ratings is now Negative; the trend on all short-term ratings is now Stable. The aforementioned ratings have been removed from Under Review with Negative Implications, where they were placed on 24 May 2012 following DBRS’s similar action on the Parent.

These rating actions follow DBRS’s downgrade of Popular to A (low) from A (high). Popular’s ratings have been removed from Under Review with Negative Implications; the trend is now Negative.

DBRS maintains its SA1 support assessment for Targobank. The SA1 designation implies strong and predictable support from the parent. As a supported rating with an SA1 designation, Targobank’s rating will generally move in tandem with Popular’s long-term debt ratings. The equalization of Targobank’s long-term debt rating of A (low) with Popular’s long-term debt rating of A (low) reflects the position of Targobank as a banking subsidiary domiciled within Spain. DBRS does not have a public rating on Crédit Mutuel, but takes into account Crédit Mutuel’s significant position in the French banking system and its international banking activities. Given the strategic relationship between Popular and Crédit Mutuel, DBRS expects that the parents would agree upon arrangements to support Targobank in the event that support would be needed.

Notes:
All figures are in 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 the DBRS rating of the Kingdom of Spain. DBRS considers the information available to it for the purposes of providing this rating was of satisfactory quality.

This rating is endorsed by DBRS Ratings Limited for use in the European Union.

Lead Analyst: Roger Lister
Rating Committee Chair: Peter Burbank
Initial Rating Date: 21 September 2006
Most Recent Rating Update: 24 May 2012

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