Ratings On Spain-Based Abanca Affirmed At 'BB-/B' Following RAC Criteria Revision; Removed From UCO; Outlook Positive

On July 20, 2017, we published an update to our risk-adjusted capital (RAC) framework methodology. Under the new methodology, our calculation of Abanca's 2016 RAC ratio is about 140 basis points lower than before, mostly because of our more conservative treatment of deferred tax assets (DTAs). However, our ratings on Abanca already captured its large stock of DTAs, which lower its quality of capital. We think that the revamping of the risk management function is bearing fruit, with Abanca's asset quality metrics now comparing better to the system average. We are affirming our 'BB-/B' issuer credit ratings on the bank. The long-term ratings are no longer under criteria observation (UCO). The outlook remains positive, reflecting the potential for Spain's economic

...+ On July 20, 2017, we published an update to our risk-adjusted capital (RAC) framework methodology. + Under the new methodology, our calculation of Abanca's 2016 RAC ratio is about 140 basis points lower than before, mostly because of our more conservative treatment of deferred tax assets (DTAs). + However, our ratings on Abanca already captured its large stock of DTAs, which lower its quality of capital. + We think that the revamping of the risk management function is bearing fruit, with Abanca's asset quality metrics now comparing better to the system average. + We are affirming our '##-/B' issuer credit ratings on the bank. The long-term ratings are no longer under criteria observation (UCO). + The outlook remains positive, reflecting the potential for Spain's economic and operating environment to become more supportive. An upgrade would depend on Abanca becoming sustainably profitable and our view of its capital strength compared to the risks it faces. MADRID (S&P Global Ratings) Aug....

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