DBRS Morningstar Revises Trend on Santander’s COR Ratings to Stable after Sovereign Rating Action

DBRS Ratings GmbH (DBRS Morningstar) revised the Trend on Banco Santander SA (Santander or the Group)’s AA (low) Long-Term Critical Obligations (COR) rating and R-1 (middle) Short-Term Critical Obligations rating to Stable from Positive. Santander’s Issuer, Senior and Deposit Ratings as well as the Intrinsic Assessment (IA) are unaffected by this rating action. See the full list of ratings at the end of this press release.

KEY RATING CONSIDERATIONS

The change of the Trend on the Long-Term and Short-Term COR to Stable from Positive is driven by DBRS Morningstar’s rating action on the Spanish Sovereign Rating. On May 29, 2020, DBRS Morningstar confirmed the Kingdom of Spain’s ratings at “A”/R-1 (low) and revised the Trend to Stable from Positive (DBRS Morningstar Confirms Kingdom of Spain at “A”, Trend Changed to Stable). DBRS Morningstar rates Santander’s COR ratings one notch above its IA as Santander’s IA is also positioned one notch above the Kingdom of Spain’s rating, to reflect the Group’s geographical diversification. As a result, Santander’s Long-Term COR rating is AA (low), however the Trend has been changed to Stable, in line with the Trend on the sovereign rating.

RATING DRIVERS
The Long-Term and Short-Term Critical Obligations ratings of Santander will generally be affected by changes in the Bank’s IA. An upgrade would therefore follow an upgrade of the Bank’s IA. An upgrade could also occur following an upgrade of the Kingdom of Spain.

Similarly, a downgrade could be driven by a multi-notch downgrade of the Bank’s IA or a downgrade of the Kingdom of Spain’s ratings

ESG CONSIDERATIONS
A description of how DBRS Morningstar considers ESG factors within the DBRS Morningstar analytical framework and its methodologies can be found at: https://www.dbrsmorningstar.com/research/357792

The Grid Summary Grades for Banco Santander SA are as follows: Franchise Strength – Very Strong/Strong; Earnings – Strong; Risk Profile – Strong/Good; Funding & Liquidity – Strong; Capitalisation – Strong.

Notes:
All figures are in EUR unless otherwise noted.

The principal methodology is the Global Methodology for Rating Banks and Banking Organisations (11 June 2019) https://www.dbrsmorningstar.com/research/346375/global-methodology-for-rating-banks-and-banking-organisations

For more information regarding rating methodologies and Coronavirus Disease (COVID-19), please see the following DBRS Morningstar press release: https://www.dbrsmorningstar.com/research/357883

The sources of information used for this rating include Company Documents, Santander 2019 Presentation, Santander 2019 Press Release, Santander 4Q 2019 Report, Santander 2019 Annual Accounts, European Banking Authority 1H 2019 Risk Dashboard 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 12-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

The sensitivity analysis of the relevant key rating assumptions can be found at: https://www.dbrsmorningstar.com/research/362003

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

Lead Analyst: Pablo Manzano, Vice President – Global Financial Institutions
Rating Committee Chair: Elisabeth Rudman - Managing Director, Head of European FIG - Global FIG
Initial Rating Date: October 11, 2006
Last Rating Date: November 29, 2019

DBRS Ratings GmbH, Sucursal en España
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Tel. +34 (91) 903 6500

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Geschäftsführer: Detlef Scholz
Amtsgericht Frankfurt am Main, HRB 110259

For more information on this credit or on this industry, visit www.dbrsmorningstar.com.