Moody’s gives A3 to Santander Consumer Bank

Moody’s Investors Service said it assigned an A3 rating to Santander Consumer Bank AG.

Santander’s issuer ratings are based on the bank’s baa1 baseline credit assessment and Adjusted BCA and the outcome of Moody’s Advanced Loss Given Failure analysis. Moody’s said it doesn’t apply rating uplift from low government support because of SCB’s marginal importance to the German banking system.

“SCB’s funding structure relies primarily on retail deposits but is accompanied by moderate issuance of bonds designed to be loss absorbing; the results from Moody’s Advanced LGF analysis indicate a low loss-given-failure of junior deposits and senior unsecured liabilities, leading to one notch of rating uplift for the bank’s long-term deposit and issuer ratings from SCB’s baa1 Adjusted BCA,” said Moody’s in a press release.

The outlook is positive. The positive outlook indicates Moody’s estimate of a further increase in the volume of loss-absorbing instruments of SCB over the next 12-18 months. Moody’s said it also expects the bank’s parent Santander Consumer Finance SA to subscribe meaningful volumes of such instruments over the next years as part of the group’s internal funding and capital measures to meet the requirements of internal total loss absorbing capacity and minimum requirements for own-funds and eligible liabilities.

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