Moody’s and Fitch may up Novobanco rating if BPCE sales concluded successfully

The US ratings agencies say that if the acquisition of Novobanco by French group BPCE is successfully completed, then it will likely increase the bank’s rating.

In a note sent to the securities market regulator, CMVM, the bank led by CEO Mark Bourke, announced that Fitch has placed its long and short-term risk of default at Ratings Watch Positive. Currently the ratings are at BBB and F2 respectively.

“This action from the ratings agency reflects “Fitch’s perspective that if Novobanco is acquired by Group BPCE”, which has an overall ‘A’ rating with Stable outlook, it “would probably greatly benefit from the support of the shareholder (BPCE) with a higher financial rating”, states the note sent to the CMVM on Friday.

“Upon completion of the acquisition, Fitch will likely base Novobanco’s default risk ratings “on shareholder support and assign a Shareholder Support Rating (SSR)”. Fitch plans to re-examine the Rating Watch Positive upon completion of the transaction, the same note adds.

On the 17th of this month, Moody’s chose to reaffirm Novobanco’s financial ratings, including the unsecured senior debt rating at Baa1 with a positive outlook. However, the integration into the second largest French banking group, which includes institutions such as Banque Populaire, Caisse d’Epargne, Natixis, among others, may in the future dictate an increase in the rating.