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

DBRS Ratings Limited (DBRS) confirmed the ratings of Banco Santander Totta SA (Totta or the Bank), following the confirmation of its parent, Banco Santander SA (Santander or the Parent). DBRS 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 rating of the Parent. Totta’s support assessment remains SA1.

KEY RATING CONSIDERATIONS
These rating actions follow DBRS’s confirmation of Santander’ Issuer Ratings at A (high) / R-1 (low), with a Stable trend. DBRS maintains its SA1 support assessment for Totta. Totta’s SA1 designation implies strong and predictable support from the Parent, and Totta’s rating will generally move in tandem with Santander’s long-term debt ratings. The SA1 designation considers Totta’s 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 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’s support assessment, and potentially also have a negative impact on Totta’s ratings.

Positive rating pressure on the parent’s ratings would likely be linked to a further improvement in the Spanish sovereign rating, coupled with continued improving trends in the bank’s earnings and risk profile. While less likely, negative ratings pressure could arise if there is any indication of an increased risk profile, particularly within Santander’s consumer finance or wholesale banking businesses, without the appropriate increase in capitalisation. Additionally, lower earnings prospects in its international subsidiaries would likely put negative pressure on Santander’s ratings, as this would reduce the benefit of the Group’s international diversification. 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. With the acquisition of Banco Popular Portugal S.A., DBRS sees Banco Santander Totta as further solidifying its position as the number 2 bank in Portugal. DBRS 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 EUR unless otherwise noted.

The principal applicable methodology is the Global Methodology for Rating Banks and Banking Organisations (July 2018) and DBRS Criteria: Guarantees and Other Forms of Support (January 2018). These can be found can be found at: http://www.dbrs.com/about/methodologies

The sources of information used for this rating include SNL Financial, company disclosures, Bank of Spain, and the European Banking Authority (EBA). DBRS considers the information available to it for the purposes of providing this rating to be 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 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 Limited 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
Most Recent Rating Update: April 12, 2018

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