Moody’s upgrades Santander UK debt

Moody's Investors Service said it confirmed Santander UK plc’s deposit ratings at A1 and upgraded its senior debt ratings to A1 from A2.

At the same time, the agency upgraded the bank's standalone baseline credit assessment to a3 from baa1 and the senior subordinated rating and junior subordinated ratings to Baa1 and Baa2(hyb), respectively, from Baa2 and Baa3(hyb).

"The rating actions take into account two main factors: firstly our upgrade of SAN UK's standalone Baseline Credit Assessment, which was driven by improvements in the bank's leverage ratio, as calculated by Moody's, and asset quality metrics, and secondly a change in one of the assumptions we use in our Advanced Loss Given Failure Analysis," Dany Castiglione, Moody's lead analyst on Santander UK, said in a news release.

"The bank 's leverage ratio, as calculated by Moody's, points to a rising amount of capital covering assets, increasing to 4.9% at the end of the first half of 2015, from 4.2% at the end of 2014, following the issuance of £750 million Additional Tier 1 notes in June and an increase in net profits during the first six months of 2015. We expect this ratio to further improve, to more than 5% by the end of this year. Moreover, we lowered the assumption of deposits considered junior to 10% from 26%. This led to the confirmation of the long-term deposit rating rather than its upgrade, as for the other ratings."

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