DBRS on Dec. 7 upgraded Santander Totta SGPS SA's long-term issuer, deposits and senior debt rating to A (low) from BBB (high).
The rating agency confirmed the bank's short-term issuer, deposits and debt rating at R-1 (low), while its support assessment remains at SA1. The trend on all the ratings remains stable, in line with parent Banco Santander SA.
The ratings actions follow the confirmation of Banco Santander's senior long-term ratings at A, DBRS said, adding that prior to the upgrade, it incorporated a two-notch differential between Santander Totta's long-term ratings and those of the parent, which reflected risks associated with rating a bank subsidiary in a foreign, lower-rated country.
The upgrade reflects DBRS' view that Portugal's stabilizing banking environment allows for Santander Totta's long-term ratings to revert to a more typical one-notch differential between subsidiary and parent, particularly given the bank's increasing importance to Banco Santander.