Negative Rating Actions Taken On Multiple Benelux Banks On Deepening COVID-19 Downside Risks

Despite governments' measures to contain the COVID-19 pandemic, European economies, including Belgium, the Netherlands, and Luxembourg, face an unprecedented challenge to manage the slowdown of corporates' activity and of global trade given these economies' high degree of openness. We continue to expect the various Benelux governments' wide-ranging fiscal and related monetary measures to substantially mitigate this extraordinarily sharp, cyclical shock to the economy, and so also support the banking systems in their key role as a conduit of fiscal and monetary support. Even under our base case of an economic recovery starting in third-quarter 2020, we expect bank earnings, asset quality, and in some cases, capitalization, to weaken meaningfully through end-2020 and into 2021. Our negative rating actions reflect these

...- Despite governments' measures to contain the COVID-19 pandemic, European economies, including Belgium, the Netherlands, and Luxembourg, face an unprecedented challenge to manage the slowdown of corporates' activity and of global trade given these economies' high degree of openness. - We continue to expect the various Benelux governments' wide-ranging fiscal and related monetary measures to substantially mitigate this extraordinarily sharp, cyclical shock to the economy, and so also support the banking systems in their key role as a conduit of fiscal and monetary support. - Even under our base case of an economic recovery starting in third-quarter 2020, we expect bank earnings, asset quality, and in some cases, capitalization, to weaken meaningfully through end-2020 and into 2021. - Our negative rating actions reflect these factors and our view that downside risks remain substantial. That said, we continue to see differentiated implications for banks in the region. - We could take further...

Ratings Action