DBRS Confirms Santander Totta at BBB (high), Stable Trend, After Santander Confirm at “A”, Stable

DBRS, Inc. (DBRS) has today confirmed the ratings of Banco Santander Totta S.A. (Totta or the Bank) following the confirmation of its parent, Banco Santander S.A. (Santander or the Parent). DBRS has confirmed Totta’s Senior Unsecured Long-Term Debt & Deposit rating of BBB (high) and Short-Term Debt & Deposit rating at R-1 (low). The trend on all ratings remains Stable, in line with the rating of the Parent.

These rating actions follow DBRS’s confirmation of Santander at “A”, with a Stable trend. DBRS maintains its SA1 support assessment for Totta. The SA1 designation implies strong and predictable support from the Parent. As a supported rating with an SA1 designation, Totta’s rating will generally move in tandem with Santander’s long-term debt ratings.

The ratings of Totta reflect its important role as a core component of Santander’s international franchise and DBRS’s expectation that Santander has the willingness and ability to support Totta, if needed. The two notch differential between Totta’s long-term debt rating of BBB (high) and Santander’s long-term debt rating of “A” reflects the risks associated with rating a bank subsidiary in foreign country, particularly a lower-rated country. DBRS rates the Republic of Portugal at BBB (low) with a Stable 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 Totta.

RATING DRIVERS
Positive rating pressure would likely be linked to improvement in Santander’s long-term debt ratings. Alternatively, a downgrade of Santander’s ratings would also likely negatively impact Totta’s ratings.

Any indication of a reduction of support from the Parent could impact DBRS’s support assessment, and potentially have a negative impact on Totta’s ratings. Furthermore, an improvement in the operating environment in Portugal, reflected in the sovereign debt rating, could reduce the notching differential between the Parent and Totta.

Notes:
All figures are in Euros unless otherwise noted.

The principal applicable methodology is the Global Methodology for Rating Banks and Banking Organisations (June 2016). Other applicable methodologies include DBRS Criteria: Support Assessments for Banks and Banking Organisations (March 2016), Rating Bank Capital Securities – Subordinated, Hybrid, Preferred & Contingent Capital Securities (February 2016), and DBRS Criteria: Guarantees and Other Forms of Support (February 2016). These can be found can be found at: http://www.dbrs.com/about/methodologies

The primary sources of information used for this rating include company documents and SNL Financial. 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: Michael Driscoll
Initial Rating Date: July 18, 2012
Most Recent Rating Update: July 9, 2015

The rated entity or its related entities did participate in the rating process. DBRS did have access to the accounts and other relevant internal documents of the rated entity or its related entities.