DBRS Confirms Banco Popular Portugal at BBB After Confirmation of BPE

DBRS, Inc. (DBRS) has today confirmed the ratings of Banco Popular Portugal S.A. (BP Portugal) following the confirmation of its parent, Banco Popular Español S.A. (Popular or the Parent). DBRS has confirmed BP Portugal’s Senior Long-Term Debt & Deposit rating at BBB and Short-Term Debt & Deposit rating at R-2 (high). The trend on all ratings is Negative.

These rating actions follow DBRS’s confirmation of Popular’s Senior Unsecured Long-Term Debt & Deposit rating at A (low) with a Negative trend and Short-Term Debt & Deposit rating at R-1 (low) with a Stable trend.

DBRS maintains its support assessment of SA1 for BP Portugal. The SA1 designation implies strong and predictable support from the Parent. As a supported rating with an SA1 designation, BP Portugal’s rating will generally move in tandem with Popular’s long-term debt ratings.

The ratings of BP Portugal, a wholly-owned direct subsidiary of Popular, reflect its important role in Popular’s overall strategy as well as DBRS’s expectation that Popular has both the resources and the willingness to support BP Portugal, if needed. The two notch differential between BP Portugal’s long-term debt rating of BBB and Popular’s long-term debt rating of A (low) reflects the risks associated with rating a bank subsidiary in a foreign country, particularly a lower-rated one. DBRS rates the Republic of Portugal at BBB (low) with a Negative trend. DBRS views the increased risks associated with the lower rating of the Republic of Portugal as appropriately reflected in the two notch ratings differential between the Parent and BP Portugal. Without parental support, BP Portugal’s ratings would be significantly lower.

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 issuer, SNL Financial and 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: Lisa Kwasnowski
Rating Committee Chair: Alan G. Reid
Initial Rating Date: 1 March 2012
Most Recent Rating Update: 23 August 2012

For further information on DBRS’ historic default rates published by the European Securities and Markets Administration (“ESMA”) in a central repository see http://cerep.esma.europa.eu/cerep-web/

The conditions that lead to the assignment of a Negative or Positive Trend are generally resolved within a twelve month period. DBRS’s trends and ratings are constantly under surveillance.

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