Moody's on June 8 assigned Aa1/P-1 long- and short-term local-currency counterparty risk ratings to Liechtenstein-based lenders LGT Bank AG and Liechtensteinische Landesbank AG.
The agency noted that the ratings assignments follow a June 6 update to its banks rating methodology. The counterparty risk ratings assess the ability of entities to honor the uncollateralized portion of non-debt counterparty financial liabilities as well as the expected financial losses in the event such liabilities are not honored.
Moody's considers the likelihood of government support for the two banks' uncollateralized portion of nondebt counterparty financial liabilities to be moderate, reflecting the banks' importance to the domestic deposit-taking market and sizable national market shares as domestic systemically relevant financial institutions.
The two banks' counterparty risk ratings are higher than the rated banks' senior unsecured debt or issuer ratings, reflecting the agency's view that secured counterparties to banks typically benefit from greater protections under insolvency laws and bank resolution regimes than senior unsecured creditors, and that this benefit is likely to extend to the unsecured portion of such secured transactions in most bank resolution regimes.
The counterparty risk ratings of LGT Bank and Liechtensteinische Landesbank are linked to the adjusted baseline credit assessment and the results of Moody's existing advanced loss-given-failure analysis, the agency noted. Consequently, these ratings would also likely be affected by any deterioration or upward change to the adjusted baseline credit assessment and rating uplift or lower rating uplift under the advanced loss-given-failure analysis.
