S&P affirms KAS BANK rating – outlook to ‘negative’

Yesterday rating agency Standard & Poor’s (S&P) affirmed the BBB+ long term and A-2 short term counterparty credit ratings of the bank. The outlook is revised to ‘negative’.

The outlook reflects S&P’s view on three developments, two with a negative impact on credit standing and one with a positive impact.

S&P expect that EU governments will be less able to grant extraordinary government support if the Banking Recovery and Resolution Directive (BRRD) comes into force as of January 2016. KAS BANK has one notch of uplift because it is a systemic important bank in the Netherlands.

S&P is of the opinion that as a result of the recently announced scaling down of the collaboration with dwpbank KAS BANK’s business position could weaken over the next two years.

On the plus side, S&P notes KAS BANK is on track to achieve its goal of cutting expenses and restoring profitability. However, this does not offset the two downside risks, thus the revision of the outlook from ‘stable’ to ‘negative’.

The negative outlook implies the rating could be downgraded if in two years time KAS BANK is not able to consolidate its franchise and if extraordinary government support is considered less predictable under BRRD.

Conversely, the outlook can be revised back to ‘stable’ if strategic initiatives including the current restructuring bear fruit. S&P observes that regulatory initiatives (AIFMD, EMIR) affecting the European financial services industries, as well as new reporting requirements for Dutch pension funds, provide opportunities for KAS BANK.

For more information we refer to the S&P’s RatingsDirect Research Update (PDF in new window).