DBRS Takes Rating Actions on Subordinated Debt of European Banks

DBRS, Inc. and DBRS Ratings Limited (collectively, DBRS) has today taken rating actions on the subordinated and hybrid debt of certain European financial institutions. This rating action concludes the review initiated on May 8, 2014 and reflects the developments that have been taking place in the position of subordinated and hybrid bond holders of European banks that come under financial stress. Rating downgrades are in most cases limited to one notch.

As indicated in the press release of May 8, in DBRS's view, even though the necessary legislation is still to be implemented in some countries, the finalisation of the European Bank Recovery and Resolution Directive (European BRRD) in April 2014 together with the European Commission's (EC's) updated State Aid rules of September 2013 provide the framework needed for regulators in Europe to treat subordinated and hybrid debt holders as a source of capital in a failing bank and in a way that differs from the treatment of senior debt. Consequently, DBRS now notches these instruments from the bank's Intrinsic Assessment (IA), rather than from the senior debt rating, which may incorporate systemic support.

As explained in DBRS' criteria "Rating Bank Capital Securities - Subordinated, Hybrid, Preferred & Contingent Capital Securities" published in December 2013, where governments are disposed towards imposing losses on subordinated debt and hybrid holders at a bank under stress, DBRS's approach is to notch from the bank's Intrinsic Assessment (IA). DBRS already notches any subordinated debt that converts to preferred shares from the IA to reflect the weaker position of such obligations at a bank under stress.

DBRS now rates subordinated debt in Europe either one notch (for mandatory pay or discretionary pay but cumulative instruments) or two notches (for discretionary pay, non-cumulative instruments) below the IA. As DBRS has typically incorporated up to one notch of systemic support into the senior unsecured debt ratings of the affected banks, the change to notching from the IA instead of from the senior unsecured debt rating, has led to a lowering of the subordinated debt and hybrid ratings.

The subordinated debt ratings of 17 financial institutions were lowered by 1 notch, 1 institution by 2 notches, and 4 institutions' subordinated debt ratings were confirmed to reflect the fact that the IA is already at the same level as the senior unsecured debt rating (see detailed rating table below).

The subordinated debt ratings of BES and ESFG are not included in the table below, as the ratings remain under review following rating actions announced on July 11, 2014. DBRS noted that in the case of Landesbank Berlin, the A (high) senior debt rating, which is in line with the floor rating for the Sparkassen-Finanzgruppe, also incorporates 1 notch of systemic support and this has now been removed from the subordinated debt ratings, resulting in a 1 notch downgrade. DBRS also noted that the confirmation of the ratings of ABN AMRO's perpetual subordinated notes at A (low) moves the ratings back in line with the normal notching for these instruments.

Notes:
The principal applicable methodology is the Global Methodology for Rating Banks and Banking Organisations (June 2014). Other applicable methodologies include the DBRS Criteria - Support Assessments for Banks and Banking Organisations (January 2014) and DBRS Criteria: Rating Bank Capital Securities - Subordinated, Hybrid, Preferred & Contingent Capital Securities (December 2013). These can be found at: http://www.dbrs.com/about/methodologies

The sources of information used for this rating include company reports, Bloomberg and SNL Financial. DBRS considers the information available to it for the purposes of providing this rating 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

Intesa Sanpaolo SpA:

Lead Analyst: Peter Burbank
Rating Committee Chair: William Schwartz
Initial Rating Date: September 19, 2013
Most Recent Rating Update: September 19, 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.

ABN AMRO Group N.V.:

Lead Analyst: Ross Abercromby
Rating Committee Chair: William Schwartz
Initial Rating Date: June 25, 2010
Most Recent Rating Update: October 18, 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 Comercial Português, S.A.:

Lead Analyst: Lisa Kwasnowski
Rating Committee Chair: William Schwartz
Initial Rating Date: June 10, 2011
Most Recent Rating Update: June 28, 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.

Caixa Económica Montepio Geral:

Lead Analyst: Lisa Kwasnowski
Rating Committee Chair: William Schwartz
Initial Rating Date: June 27, 2011
Most Recent Rating Update: June 27, 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.

Caixa Geral de Depósitos, S.A.:

Lead Analyst: Lisa Kwasnowski
Rating Committee Chair: William Schwartz
Initial Rating Date: December 23, 2011
Most Recent Rating Update: June 28, 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 Bilbao Vizcaya Argentaria, S.A.:

Lead Analyst: Lisa Kwasnowski
Rating Committee Chair: William Schwartz
Initial Rating Date: November 23, 2009
Most Recent Rating Update: April 4, 2014

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 Popular Español S.A.:

Lead Analyst: Lisa Kwasnowski
Rating Committee Chair: William Schwartz
Initial Rating Date: September 21, 2006
Most Recent Rating Update: July 31, 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 SA:

Lead Analyst: Lisa Kwasnowski
Rating Committee Chair: William Schwartz
Initial Rating Date: October 11, 2006
Most Recent Rating Update: August 29, 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.

This is an unsolicited rating. This credit rating was not initiated at the request of the issuer.

Credit Suisse Group AG:

Lead Analyst: Lisa Kwasnowski
Rating Committee Chair: William Schwartz
Initial Rating Date: July 16, 2001
Most Recent Rating Update: December 19, 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.

This is an unsolicited rating. This credit rating was not initiated at the request of the issuer.

Skandinaviska Enskilda Banken AB:

Lead Analyst: Ross Abercromby
Rating Committee Chair: William Schwartz
Initial Rating Date: December 14, 2006
Most Recent Rating Update: January 8, 2014

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.

This is an unsolicited rating. This credit rating was not initiated at the request of the issuer.

Nordea Bank AB:

Lead Analyst: Ross Abercromby
Rating Committee Chair: William Schwartz
Initial Rating Date: November 28, 2006
Most Recent Rating Update: February 20, 2014

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.

This is an unsolicited rating. This credit rating was not initiated at the request of the issuer.

Svenska Handelsbanken AB:

Lead Analyst: Ross Abercromby
Rating Committee Chair: William Schwartz
Initial Rating Date: December 7, 2009
Most Recent Rating Update: March 21, 2014

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.

This is an unsolicited rating. This credit rating was not initiated at the request of the issuer.

Swedbank AB:

Lead Analyst: Ross Abercromby
Rating Committee Chair: William Schwartz
Initial Rating Date: December 18, 2009
Most Recent Rating Update: January 8, 2014

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.

Royal Bank of Scotland Group plc, The:

Lead Analyst: Elisabeth Rudman
Rating Committee Chair: William Schwartz
Initial Rating Date: October 27, 2004
Most Recent Rating Update: March 5, 2014

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.

Barclays Bank PLC:

Lead Analyst: Elisabeth Rudman
Rating Committee Chair: William Schwartz
Initial Rating Date: September 9, 2005
Most Recent Rating Update: June 3, 2014

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 plc:

Lead Analyst: Elisabeth Rudman
Rating Committee Chair: William Schwartz
Initial Rating Date: January 19, 2009
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.

This is an unsolicited rating. This credit rating was not initiated at the request of the issuer.

Nationwide Building Society:

Lead Analyst: Ross Abercromby
Rating Committee Chair: William Schwartz
Initial Rating Date: December 9, 1998
Most Recent Rating Update: September 12, 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.

This is an unsolicited rating. This credit rating was not initiated at the request of the issuer.

Belfius Bank SA/NV:

Lead Analyst: Vitaline Vincent
Rating Committee Chair: William Schwartz
Initial Rating Date: December 5, 2007
Most Recent Rating Update: January 30, 2014

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.

This is an unsolicited rating. This credit rating was not initiated at the request of the issuer.

DZ BANK AG Deutsche Zentral-Genossenschaftsbank:

Lead Analyst: Peter Burbank
Rating Committee Chair: William Schwartz
Initial Rating Date: May 22, 2007
Most Recent Rating Update: February 11, 2014

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.

This is an unsolicited rating. This credit rating was not initiated at the request of the issuer.

Deutsche Pfandbriefbank AG:

Lead Analyst: Peter Burbank
Rating Committee Chair: William Schwartz
Initial Rating Date: July 19, 2006
Most Recent Rating Update: May 6, 2014

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.

This is an unsolicited rating. This credit rating was not initiated at the request of the issuer.

Landesbank Berlin AG:

Lead Analyst: Peter Burbank
Rating Committee Chair: William Schwartz
Initial Rating Date: January 22, 2007
Most Recent Rating Update: October 25, 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