DBRS Morningstar Confirms Issuer Ratings of Santander Totta at “A” / R-1 (low), Stable trend

DBRS Ratings GmbH (DBRS Morningstar) confirmed the ratings of Banco Santander Totta SA (Totta or the Bank), following the confirmation of the ratings of its parent, Banco Santander SA (Santander or the Parent). DBRS Morningstar has confirmed Totta’s Long-Term Issuer Rating at “A”, and its Short-Term Issuer Rating at R-1 (low). The trend on all of the ratings remains Stable, in line with the trend on Santander’s Issuer Ratings. Totta’s support assessment remains SA1. A full list of rating actions is included at the end of this press release.

KEY RATING CONSIDERATIONS

These rating actions follow DBRS Morningstar’s confirmation of Santander’s A (high) / R-1 (low) Issuer Ratings, with a Stable trend. DBRS Morningstar maintains its SA1 support assessment for Totta, which implies strong and predictable support from the Parent. As a result, Totta’s rating will generally move in tandem with Santander’s ratings. The SA1 designation considers Totta’s important role as a core component of Santander’s international franchise and DBRS Morningstar’s expectation that Santander has the willingness and ability to support Totta, if required.

RATING DRIVERS

Positive rating pressure would likely be linked to an improvement in Santander’s Issuer Ratings. A downgrade of Santander’s ratings would also likely have a negative impact on Totta’s ratings. Any indication of a reduction of support from the Parent could impact DBRS Morningstar’s support assessment, and potentially also have a negative impact on Totta’s ratings.

Positive rating pressure on the parent’s ratings would likely require improvements in the bank’s underlying and statutory profitability as well as further improvement in the Group’s asset quality, particularly in Spain. While less likely, negative ratings pressure could arise if there is any indication of an increased risk profile, particularly within Santander’s consumer finance, wholesale banking or South America businesses, without the appropriate increase in capitalisation. A downgrade of Spain’s sovereign rating would also have negative rating implications.

RATING RATIONALE

Santander Totta SA is a commercial bank in Portugal owned by Santander that provides universal banking services to individuals, small- and medium-sized enterprises and large corporations. As the company continues to optimise the structure and reduce costs following the integration of Banco Popular Portugal, DBRS Morningstar expects Banco Santander Totta to further solidify its strong market position in Portugal. DBRS Morningstar assumes that support from the Parent would be forthcoming for Totta in a timely manner, as the reputational consequences for Santander of any perceived lack of support would be substantial.

Notes:

All figures are in Euros unless otherwise noted.

The principal methodologies are the Global Methodology for Rating Banks and Banking Organisations (June 2019) and DBRS Criteria: Guarantees and Other Forms of Support (January 2019). These can be found at: http://www.dbrs.com/about/methodologies

The sources of information used for this rating include Company Documents, EBA, Bank of Spain and S&P Global Market Intelligence. DBRS Morningstar considers the information available to it for the purposes of providing this rating to be of satisfactory quality.

DBRS Morningstar 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 Morningstar's outlooks and ratings are under regular surveillance

For further information on DBRS Morningstar historical default rates published by the European Securities and Markets Authority (ESMA) in a central repository, see:
http://cerep.esma.europa.eu/cerep-web/statistics/defaults.xhtml.

Ratings assigned by DBRS Ratings GmbH are subject to EU and US regulations only.

Lead Analyst: Pablo Manzano, Vice President - Global FIG
Rating Committee Chair: Ross Abercromby, Managing Director - Global FIG
Initial Rating Date: July 18, 2012
Last Rating Date: December 3, 2018

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Spain

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Geschäftsführer: Detlef Scholz
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