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Moody's Investors Service Inc.

Moody's Affirms Santander Bank Polska's Ratings with Stable Outlook

Strategic Insights

— 2 min read

Moody's Investors Service has affirmed Santander Bank Polska S.A.'s (SBP) ratings, including its long- and short-term deposit ratings, Counterparty Risk Ratings, and Baseline Credit Assessment (BCA), following the bank's announcement that Erste Group Bank AG has agreed to acquire a 49% controlling stake. The transaction is expected to close by year-end, pending additional closing conditions and regulatory approvals. Moody's believes that the transaction will have a limited financial impact on SBP's standalone credit profile and that execution risks associated with the deal will be well managed.

Key Takeaways:

  • Moody's has affirmed SBP's A2/P-1 long- and short-term deposit ratings and its baa2 BCA, reflecting the view that the transaction will have a limited financial impact on SBP's standalone credit profile.
  • The affirmation of SBP's BCA is driven by the bank's strong profitability, capitalization, and relatively small size of the consumer bank being sold.
  • The deal is expected to have a positive impact on SBP's capitalization, with a marginal improvement in the bank's ratio of nonperforming loans to gross loans and a temporary increase in the bank's profitability.
  • Moody's expects SBP's resolution approach to remain unchanged following the change in ownership, with Erste following a multiple point of entry (MPE) resolution approach and its CEE subsidiary banks being separate resolution entities.
  • The stable outlook on SBP's long-term deposit ratings reflects Moody's view that the financial impact of the planned sale of SCB will be limited and that the costs and execution risks associated with the announced change in ownership will be appropriately managed.
  • Factors that could lead to an upgrade of SBP's ratings include an upgrade of its Adjusted BCA or additional issuances of bail-in-able instruments, leading to a higher notching uplift from Moody's Advanced LGF analysis.

Statistics:

  • SBP's BCA remains at baa2, reflecting the view that the transaction will have a limited financial impact on SBP's standalone credit profile.
  • The transaction is expected to close by year-end, pending additional closing conditions and regulatory approvals.
  • SBP's long-term Counterparty Risk Assessment remains at A1(cr), reflecting the bank's strong credit profile and Erste's brand association with the bank.
  • SBP's Adjusted BCA remains at baa1, driven by the assumption of a moderate likelihood of support in case of need from Santander.
  • SBP's deposit and senior unsecured MTN program ratings benefit from two notches of rating uplift from the bank's Adjusted BCA, with no additional uplift for government support.

Sources:

  • Moody's Investors Service
  • Banks methodology published in November 2024 (https://ratings.moodys.com/rmc-documents/432741)

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