DBRS: Impact of Updated Criteria on Bank Preferred and Preferred-Hybrids in Europe

DBRS, Inc. and DBRS Ratings Limited (collectively, DBRS) has downgraded some ratings and upgraded other ratings for preferred securities (preferreds) and securities that can convert to preferreds (preferred hybrids) at certain banks in Europe to reflect the updated “DBRS Criteria: Rating Bank Capital Securities – Subordinated, Hybrid, Preferred & Contingent Capital Securities” (Criteria) released today.

The ratings on these preferred shares and preferred hybrids are impacted by a change in the updated Criteria. In the prior criteria these instruments were typically rated 3-5 notches below the issuer’s Intrinsic Assessment (IA) with some limited flexibility for less notching. This has been changed in the updated Criteria to a standard 3 notches across all rating categories.

Today’s actions apply only to preferreds that DBRS rates as listed below. Other ratings for these issuers are unchanged. Importantly, these actions do not reflect any issuer specific credit events. Related rating Trends and Under Review placements are also unchanged.

Notes:
The principal methodology applicable is: Criteria: Rating Bank Capital Securities – Subordinated, Hybrid, Preferred & Contingent Capital Securities. DBRS criteria can be found at: http://www.dbrs.com/about/methodologies

The sources of information used for these ratings include company reports, Bloomberg and SNL Financial. DBRS considers the information available to it for the purposes of providing those ratings was of satisfactory quality.

DBRS does not audit the information it receives in connection with the rating process, and it does not and cannot independently verify that information in every instance.

Generally, the conditions that lead to the assignment of a Negative or Positive Trend are resolved within a twelve month period. DBRS’s outlooks and ratings are under regular surveillance.

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/statistics/defaults.xhtml.

Royal Bank of Scotland Group plc:

Lead Analyst: Elisabeth Rudman
Rating Committee Chair: Alan G. Reid
Initial Rating Date: September 27, 1999
Most Recent Rating Update: March 21, 2013

DBRS Ratings Limited
1 Minster Court, 10th Floor
Mincing Lane
London
EC3R 7AA
United Kingdom
Registered in England and Wales: No. 7139960

Ratings assigned by DBRS Ratings Limited are subject to EU regulations only.

Lloyds Banking Group:

Lead Analyst: Elisabeth Rudman
Rating Committee Chair: Alan G. Reid
Initial Rating Date: September 27, 1999
Most Recent Rating Update: March 21, 2013

DBRS Ratings Limited
1 Minster Court, 10th Floor
Mincing Lane
London
EC3R 7AA
United Kingdom
Registered in England and Wales: No. 7139960

Ratings assigned by DBRS Ratings Limited are subject to EU regulations only.

KBC Group N/V:

Lead Analyst: Roger Lister
Rating Committee Chair: Alan G. Reid
Initial Rating Date: June 3, 2010
Most Recent Rating Update: November 26, 2013

DBRS, Inc.
140 Broadway, 35th Floor
New York, NY 10005
United States of America

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

Banco Santander S.A.:

Lead Analyst: Rui Croca
Rating Committee Chair: Alan G. Reid
Initial Rating Date: October 11, 2006
Most Recent Rating Update: August 29, 2013

DBRS Ratings Limited
1 Minster Court, 10th Floor
Mincing Lane
London
EC3R 7AA
United Kingdom
Registered in England and Wales: No. 7139960

Ratings assigned by DBRS Ratings Limited are subject to EU regulations only.

Banco Popular Español S.A.:

Lead Analyst: Rui Croca
Rating Committee Chair: Alan G. Reid
Initial Rating Date: September 21, 2006
Most Recent Rating Update: July 31, 2013

DBRS Ratings Limited
1 Minster Court, 10th Floor
Mincing Lane
London
EC3R 7AA
United Kingdom
Registered in England and Wales: No. 7139960

Ratings assigned by DBRS Ratings Limited are subject to EU regulations only.

For additional information on this rating, please refer to the linking document located at: http://www.dbrs.com/research/236983/banks-and-banking-organisations-linking-document.pdf

Information regarding DBRS ratings, including definitions, policies and methodologies are available on www.dbrs.com.