Moody’s lifts rating on CGD, BCP, Santander Totta and Novo Banco

The ratings agency Moody’s has raised the rating of Portugal’s main banks CGD, BCP, Santander Totta and Novo Banco while placing Montepio under analysis for an eventual rate rise.

The decision follows the previous positive review influenced by the improved macroeconomic situation in Portugal’s banking sector which passed from ‘Moderate’ to ‘Moderate+’.
The agency justifies the decision on the improved economic environment in which the banking sector in Portugal is operating, “…in particular thanks to the deleveraging in the private sector,” states Moody’s.
With the review published today (Wednesday), the rating of CGD and BCP was raised to ‘Baa3’ from ‘Baa1’, Totta is now ‘Baa1’ from ‘Baa2’, while Novo Banco managed to get out of the doldrums by leaping two levels at once from ‘Caa1’ to ‘B2’.
Despite these rating rises, Moody’s decided to maintain the rating of BPI at ‘Baa1’/Prime-2’ and put the rating of Montepio (B3) on standby with prospects for a rating rise at the next review.
“The actions taken regarding the rating of CGD, Totta, Novo Banco and Banco Montepio reflect the new legal framework implemented in March 2019, which gives total priority to depositors in relation to holders of senior debt awaiting resolution”, states Moody’s that stresses that this new legal framework together with the medium term financial plans for these banks and the general outlook for the sector are some of the main reasons why the prospects for these banks have been raised.