DBRS Changes Trend on CGD’s Deposit Ratings to Positive following Sovereign action

DBRS Ratings GmbH (DBRS) has changed the Trend on Caixa Geral de Depósitos, S.A.’s (CGD or the Bank) BBB Long-Term and R-2 (high) Short-Term Deposit ratings to Positive from Stable. A full list of ratings is included at the end of this press release.

KEY RATING CONSIDERATIONS
The action follows the change in DBRS’s Trend to Positive on the Republic of Portugal’s BBB/R-2 (high) Issuer Ratings on April 5th, 2019. Following the introduction in Portugal of full depositor preference in bank insolvency and resolution proceedings in March 2019, DBRS rates the Deposit ratings of the Portuguese Banks one notch above the individual banks Intrinsic Assessment (IA). As a result of the change of Trend on the Republic of Portugal’s ratings and the existing positive Trend on the ratings of CGD, the Trend on CGD’s Deposit ratings is now Positive.

RATING DRIVERS
The Long-Term and Short-Term Deposits ratings will generally move in line with changes in the IA of CGD. However, given the level of the sovereign ratings, further positive rating action would require both an upgrade of CGD’s IA and of the sovereign ratings. Furthermore, the ratings could also be affected by any further changes in the legal framework for bank resolution and or creditor hierarchy.

Positive pressure on CGD’s IA would require a track record of continued progress in domestic profitability together with continued reduction of Non-Performing loans (NPLs). Negative rating pressure would arise if domestic profitability and capital weakens significantly as a result of net operating losses and asset quality deterioration.

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). This can be found at: http://www.dbrs.com/about/methodologies

The 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 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 GmbH are subject to EU and US regulations only.

Lead Analyst: Nicola De Caro, Senior Vice President - Global FIG
Rating Committee Chair: Ross Abercromby, Managing Director – Global FIG
Initial Rating Date: 23 December 2011
Last Rating Date: 28 March 2019

DBRS Ratings GmbH
Neue Mainzer Straße 75
60311 Frankfurt am Main Deutschland
Geschäftsführer: Detlef Scholz
Amtsgericht Frankfurt am Main, HRB 110259

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