Banque et Caisse d'Epargne de l'Etat, Luxembourg

Our stable outlook on BCEE mirrors that on Luxembourg (AAA/Stable/A-1+). This reflects BCEE's status as a GRE and our expectation that the bank will keep its integral link with, and very important role for, the Luxembourg government over our outlook horizon. We factor in our expectations that, despite the marked slowdown in the real-estate markets in Luxembourg since 2022, BCEE will sustain strong profitability in 2025-2026, and that it will maintain its capitalization at, or above, the current very high level. We would lower the long-term rating on BCEE to 'AA' if we lowered the long-term rating on Luxembourg to 'AA+'. We might also consider lowering the rating if the relationship between BCEE and the Luxembourg government were to change,

...The Banque et Caisse d'Epargne de l'Etat, Luxembourg (BCEE) has a leading domestic retail banking franchise and is heavily focused on Luxembourg. BCEE ranks among the top three banks in Luxembourg. Its dominant position in its home market, particularly among households, is one of the bank's key business strengths. Its share of the individual deposit and mortgage loan segments is 40%-50%. Substantial efforts to improve its digital offer in recent years have supported the bank's customer-centric strategy, and we think this digitalization process will continue as customer demand for flexible contact channels increases....

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