Summary: Volkswagen Bank GmbH

Very strong capitalization and solid revenue generation ability. Stable retail deposit base. Regulated bank status. Dependence on the parent's sales capability. Concentration in financing related to volatile car sales. Limited geographic diversification. S&P Global Ratings' negative outlook on Volkswagen Bank GmbH (VW Bank) incorporates potential risks to the bank's financial and funding profile over the next two years. These risks follow the challenges that parent automaker Volkswagen AG (VW) currently faces after its manipulation of engine emissions. We could lower our ratings on VW Bank within the next 12-24 months if we considered that its stand-alone credit profile (SACP) had weakened due to reliance of its business prospects on the unit sales and reputation of the wider Volkswagen group. We

...Outlook: Negative S&P Global Ratings' negative outlook on Volkswagen Bank GmbH (VW Bank) incorporates potential risks to the bank's financial and funding profile over the next two years. These risks follow the challenges that parent automaker Volkswagen AG (VW) currently faces after its manipulation of engine emissions. We could lower our ratings on VW Bank within the next 12-24 months if we considered that its stand-alone credit profile (SACP) had weakened due to reliance of its business prospects on the unit sales and reputation of the wider Volkswagen group. We could revise the outlook to stable if we observed that VW Bank's operations and financial profile were not negatively affected by the events at the parent, and if the bank maintained its granular and stable customer deposit base. We consider VW Financial Services' (VW FS') recently announced plans to move VW Bank into direct 100%-ownership of VW from VW FS later 2017 as an integral strategic reorganization measure to consolidate,...

Summary