Moody's downgrades and tightens the noose around Santander.
The bank owned by Spanish magnate Emilio Botn has had its UK operations' rating downgraded by a credit rating agency; in Brazil, the institution's shares lost their buy recommendation in a Bank of America report.
Marco Damiani, 247 – With a growth strategy based on a physical presence in different countries with retail branches, the Spanish bank Santander is suffering from the effects of the crisis in Europe. Today, the Moody's rating agency downgraded the institution's risk rating by one notch, in the context of a downward review of ratings for eleven other banks operating in England. The bad news in the United Kingdom fuels rumors about the fragility of the Spanish bank in the face of the international crisis, increasing speculation about a possible acquisition by the giant HSBC.
In its latest financial report, Santander clearly demonstrated that it salvaged its results in Spain, its global headquarters, thanks to the performance of its operations in Brazil, in particular, and in Latin America more broadly. Present in more than ten countries, the bank has become accustomed to transferring profits from its best-performing branches to those needing more resources. Lately, these transfers have intensified towards Spain, with profits from various regions ending up in the coffers of the global headquarters. Now, however, in addition to the widespread crisis, which is transforming profits into losses, even markets like Brazil, with growing profits, seem to be at risk.
This week, shares of the Spanish bank on the São Paulo Stock Exchange lost their buy recommendation in an analysis report by Bank of America. The justification is that the results projected for the bank in the second half of the year will be very similar to those of the first six months, with no sign of growth. Even in a country where financial institutions are among the most profitable in all sectors, Santander is not managing to achieve good performance. This year, the bank's shares have already fallen 38,29%. In the last 365 days, the drop is even greater, reaching 41,91%.
Meanwhile, the institution comfortably leads the Central Bank's ranking of complaints, topping the list of valid complaints, released in August of this year, with 246. This is well above the second and third-placed institutions, Banco do Brasil (314) and Itaú Unibanco (204). The rate of problems with Santander's customer service is two and a half times higher than that of BB, the second-placed institution: 2,46 versus 0,98.
Today, the Moody's rating agency included Santander among 12 financial institutions operating in England that had their ratings downgraded.
Moody's downgraded the ratings of Lloyds TSB (Aa3 to A1), Santander UK (Aa3 to A1), and Co-operative Bank (A2 to A3) by one notch; RBS (Aa3 to A2) and Nationwide Building Society (Aa3 to A2) by two notches; and also downgraded the ratings of seven other small mortgage lenders. On the other hand, Clydesdale Bank's rating was maintained at A2 with a negative outlook.
According to Moody's note, the most likely scenario at this point is that the government will allow small institutions to fail if they face serious financial difficulties.
The statement was released after the Bank of England increased its money-printing program to revive the economy by £75 billion (€86 billion), to a total of £275 billion (€315 billion).
This is the first time the British issuing authority has modified the allocation for its economic stimulus program since November 2009, amid fears that the United Kingdom could enter a second recession.