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Fitch Affirms Santander Holdings USA's IDRs at 'BBB'; Downgrades VR to 'bbb-'



  Fitch Affirms Santander Holdings USA's IDRs at 'BBB'; Downgrades VR to
  'bbb-'

Business Wire

NEW YORK -- June 6, 2013

Fitch Ratings has affirmed the Issuer Default Ratings (IDRs) of Santander
Holdings USA (SHUSA) at 'BBB'. The Rating Outlook is Negative. Concurrent with
this action, Fitch has downgraded SHUSA's Viability Rating (VR) to 'bbb-' from
'bbb'. A full list of rating actions follows at the end of this release.

Today's rating action on SHUSA follows Fitch's review of Banco Santander, S.A,
SHUSA's ultimate parent. As part of that review, the IDRs of Banco Santander,
SA were affirmed at 'BBB+' with a Negative Outlook (see the press release
'Fitch Affirms Santander's, BBVA's and CaixaBank's Ratings' dated May 23,
available at www.fitchratings.com).

Key Ratings Drivers - IDRs

The IDRs of SHUSA and its subsidiaries are linked to its 100% owner, Banco
Santander, S.A. SHUSA's IDRs are one notch below Banco Santander, S.A.'s
'BBB+' IDR. The notch differential represents Fitch's view that SHUSA is a
strategically important subsidiary, but not a core subsidiary of Banco
Santander, S.A. as described in the rating criteria 'Rating FI Subsidiaries
and Holding Companies'. As such, SHUSA's IDRs are driven by Fitch's view of
institutional support.

Key Ratings Drivers -Viability Ratings

Viability Ratings are predicated on public information and reflect the stand
alone credit worthiness of the institution. Fitch has downgraded SHUSA's VR
based on comparatively weaker asset quality, higher reliance on wholesale
funding, and relatively elevated cost of funds. Public financials also show
weak core earnings and net interest margin compared to rated peers. Concurrent
with the downgrade of the VR, Fitch has also withdrawn SHUSA's VR as it
believes there is no longer adequate information to maintain the rating.
Accordingly, Fitch will no longer provide a VR for SHUSA.

RATING SENSITIVITIES - IDRs

The IDRs of SHUSA and its subsidiaries are sensitive to changes to the IDR of
its parent company, Banco Santander, S.A. Additionally, although not viewed as
likely in the near term, if SHUSA becomes less strategically important to
Banco Santander, its IDR could be downgraded.

KEY RATING DRIVERS AND SENSITIVITIES - SUPPORT RATING AND SUPPORT RATING FLOOR

SHUSA's Support Rating of '2' reflects a high probability of support from its
parent. Since this support is based on institutional support, as opposed to
sovereign support, there is no Support Rating Floor assigned. SHUSA's support
rating is sensitive to the perceived ability and willingness of the parent
company to support SHUSA.

KEY RATING DRIVERS AND SENSITIVITIES - SUBORDINATED DEBT AND OTHER HYBRID
SECURITIES

In the absence of a VR, SHUSA's subordinated debt and hybrid securities issued
by SHUSA and by various issuing vehicles are notched down from SHUSA's IDRs.
This reflects Fitch's view that the parent company would likely step in to
prevent non-performance if necessary. Nonetheless, under Fitch's criteria
'Assessing and Rating Bank Subordinated and Hybrid Securities', these
instruments will generally not be rated higher than similar issuances of the
parent company.

Fitch has downgraded and withdrawn the following ratings:

Santander Holdings USA, Inc.

--Viability Rating downgraded to 'bbb-' from 'bbb'.

Sovereign Bank, N.A.

--Viability Rating downgraded to 'bbb-' from bbb.

Fitch affirms the following:

Santander Holdings USA, Inc.

--Long-term IDR at 'BBB';

--Short-term IDR at 'F2';

--Support Rating at '2';

--Senior unsecured at 'BBB';

--Commercial paper at 'F2';

Sovereign Bank, N.A.

--Long-term IDR at 'BBB';

--Short-term IDR at 'F2';

--Support Rating at '2';

--Long-term deposit rating at 'BBB+';

--Short-term deposit rating at 'F2';

--Subordinated debt at 'BBB-';

Sovereign Capital Trust I

--Preferred stock at 'BB-'.

Sovereign Capital Trust IV

--Preferred stock at 'BB-'.

Sovereign Capital Trust VI

--Preferred stock at 'BB-'.

Sovereign Real Estate Investment Trust Holdings

--Preferred stock at 'B+'.

ML Capital Trust I

--Preferred stock at 'BB-''.

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria and Related Research:

Risk Radar (April 2013)

U.S. Banking Quarterly Comment (April 2013)

U.S. Housing Finance GSEs: Where to from Here (February 2013)

U.S. Banks: Home Equity Reset Risk Hitting the Reset Button in 2014

U.S. Banks: Rationalizing the Branch Network (Witness the Incredible Shrinking
Branch Network) (September 2012)

Treatment of Unrealized Losses in U.S. Bank Capital Rule Proposal
(Pro-Cyclical Capital Policy to Create Greater Capital Volatility for Banks)
(August 2012);

Global Financial Institutions Rating Criteria

Assessing and Rating Bank Subordinated and Hybrid Securities

Rating FI Subsidiaries and Holding Companies

Applicable Criteria and Related Research:

Risk Radar - APAC Overview

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=705515

U.S. Banking Quarterly Comment: 1Q13

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=706701

U.S. Housing Finance GSEs: Where to from Here

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=700032

U.S. Banks: Rationalizing the Branch Network (Witness the Incredible Shrinking
Branch Network)

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=688330

Treatment of Unrealized Losses in U.S. Bank Capital Rule Proposal
(Pro-Cyclical Capital Policy to Create Greater Capital Volatility for Banks)

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=685638

Global Financial Institutions Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=686181

Assessing and Rating Bank Subordinated and Hybrid Securities

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=695542

Rating FI Subsidiaries and Holding Companies

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=679209

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=793055

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS.
PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK:
HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING
DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S
PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND
METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF
CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL,
COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM
THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER
PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS
OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN
EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER
ON THE FITCH WEBSITE.

Contact:

Fitch Ratings
Primary Analyst
Jaymin Berg, CPA, +1 212-908-0368
Director
Fitch Ratings, Inc.
One State Street Plaza
New York, NY 10004
or
Secondary Analyst
Joseph Scott, +1 212-908-0624
Senior Director
or
Committee Chairperson
Christopher Wolfe, +1 212-908-0771
Managing Director
or
Media Relations:
Elizabeth Fogerty, +1 212-908-0526
elizabeth.fogerty@fitchratings.com
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