Moody’s puts Berlin Hyp on watch

Moody's Investors Service said it placed Berlin Hyp AG's and Landesbank Berlin AG's (LBB) Aa2 long-term deposit and issuer ratings as well as Berlin Hyp's senior unsecured debt ratings on review for downgrade. Both are subsidiaries of S-Erwerbsgesellschaft.

The review was triggered by Landesbank Baden-Wuerttemberg's acquisition of Berlin Hyp, which remains subject to regulatory and owner approvals. The deal is expected to close this summer.

“The transaction results in diluting credit benefits for both banks, leading to a review for downgrade of some of both banks' ratings. For Berlin Hyp, the acquisition by a lower rated entity exerts potential downwards rating pressure. For LBB, changes in the liability structures after the break-up of S-Erwerbsgesellschaft could pressure the bank's deposit and issuer ratings as investor protection from loss-absorbing instruments is expected to decline,” Moody’s said in a press release.

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