trending Market Intelligence /marketintelligence/en/news-insights/trending/r922pBJ945IshlRvFymn0Q2 content esgSubNav
In This List

S&P downgrades Frankfurt-based DVB Bank

Podcast

Street Talk Episode 87

Blog

A New Dawn for European Bank M&A Top 5 Trends

Blog

Insight Weekly: US banks' loan growth; record share buybacks; utility M&A outlook

Blog

Banking Essentials Newsletter 2021: December Edition


S&P downgrades Frankfurt-based DVB Bank

S&P Global Ratings on Dec. 15 downgraded the long- and short-term issuer credit ratings of DVB Bank SE to BBB/A-2 from A+/A-1, with a negative outlook.

The downgrade is a result of the bank's likely very weak financial performance (before parental support measures) in 2017, and the agency's view that its sole owner, DZ BANK AG, and by extension that German cooperative banking sector may look to sell the bank in spite of recent declarations to the contrary, because of its weakening risk-return profile and possibly increased regulatory capital requirements.

The agency revised up DVB Bank's stand-alone credit profile to "bb" from "bb-," following DZ Bank's gaining full ownership control and the two banks' signing a control and profit and loss transfer agreement, which S&P said reduced downside risk to DVB Bank's capitalization.

However, the agency also revised its view of DVB's strategic importance to DZ Bank and the German cooperative banking sector, saying it now sees the lender as strategically important, down from highly strategic previously.

S&P said it continues to view a sale of DVB Bank as unlikely, both because DZ Bank is likely to want to preserve the value of its stake and because there has been limited interest in banks such as DVB in the past.

The negative outlook reflects the possibility of such a sale, as well as the possibility that DVB Bank's capitalization could decline despite DZ Bank's commitment to absorb net losses.

S&P Global Ratings and S&P Global Market Intelligence are owned by S&P Global Inc.