DBRS now Rates 307 Members of Sparkassen-Finanzgruppe’s Joint Liability Scheme at A (high)

DBRS has applied its Long-Term Debt & Deposits ratings of A (high) and Short-Term Instruments ratings of R-1 (middle) to 307 institutions that are members of Sparkassen-Finanzgruppe. A full list of the ratings actions can be found at the end of this release. The trend on all ratings is Stable. The aforementioned ratings are based on DBRS’s floor ratings for the members of Sparkassen-Finanzgruppe’s joint liability scheme.

The floor ratings are based on the depth and resources of the joint liability scheme, the additional support for the group’s members from their government owners, as well as broader systemic support, and on the solid franchise of the savings banks. The strong position of the savings banks in German retail banking positively affects the overall group’s franchise strength, while the substantial risk exposures and volatile earnings of the Landesbanken have a negative effect on the overall group.

DBRS sees Sparkassen-Finanzgruppe facing several challenges, including the challenge of reducing risk exposures and stemming losses at the Landesbanken. The elevated risk exposures and volatile earnings at some Landesbanken are partly mitigated by the owner support, systemic support for the Landesbanken, as well as other specific support schemes that have been enacted to reduce the balance sheet risk of certain Landesbanken. Further challenges include sustaining the group’s cohesion and managing diverging interests of its members, and defending the strong position of the savings banks in German retail banking amid intense competition.

The floor rating is the minimum rating for all members of the Sparkassen-Finanzgruppe’s joint liability scheme. These include the more than 400 German savings banks, seven Landesbanken groups, DekaBank and ten public-sector building societies (Landesbausparkassen) as well as some other specialized institutions that are also members of the joint liability scheme. Together, these institutions form a leading European banking group with more than EUR 2.6 trillion in aggregated assets.

The Sparkassen-Finanzgruppe is represented by the Deutscher Sparkassen-und Giroverband, headquartered in Berlin, Germany.

More detail can be found in the DBRS recently-updated rating report on Sparkassen-Finanzgruppe, available at www.dbrs.com or by contacting the undernoted.