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Moody's downgrades Danske Bank's long-term deposit rating

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Moody's downgrades Danske Bank's long-term deposit rating

Moody's on Feb. 2 downgraded Danske Bank A/S' long-term bank deposit ratings to A1 from Aa3, with the outlook remaining stable.

At the same time, the rating agency affirmed the Danish lender's A1 senior unsecured debt and long-term issuer ratings and changed the outlook on both ratings to negative from positive. Moody's also affirmed the bank's P-1 short-term bank deposit rating, "a3" baseline and adjusted baseline credit assessments and Aa2(cr)/P-1(cr) long- and short-term counterparty risk assessments.

The downgrade of Danske Bank's long-term bank deposit rating and the change in outlook on the senior unsecured debt and long-term issuer ratings were driven by a correction of inputs to Moody's advanced loss given failure analysis, the agency said.

Moody's prior use of erroneous debt amounts led the agency to overestimate the size of the protection afforded to depositors when it upgraded the bank's deposit rating Oct. 12, 2016, and when it assigned a positive outlook on the bank's senior unsecured debt and issuer ratings Aug. 16, 2017, Moody's noted.