Dutch cooperative bank Rabobank lost its cherished triple-A rating from Standard & Poor's as the global banking crisis finally caught up with the only bank still holding the top rating.
The unlisted bank had long prided itself on its triple-A rating. It said in the 2007/08 financial crisis it was not tempted to snap up a bargain if it put the rating at risk, and maintains a conservative capital and liquidity stance.
Rabo is a major Dutch lender and operates in 47 other countries, with many of its 10 million customers in agricultural areas, echoing its origins as a provider of loans to farmers.
But S&P cut its long-term rating on the bank to AA from AAA as part of a sweeping overhaul of its ratings. Credit ratings influence how much a bank pays to borrow funds, and offers a guide to financial health.
Some 15 big names were cut, including HSBC and UBS, but Rabo was the only bank in Europe to fall by two notches.
"The one that jumps out is Rabobank's downgrade by two notches, which is more significant given that it was triple-A," said Carlo Mareels, credit analyst at RBC Capital Markets.
Rabobank remains the highest rated privately owned bank in the world, according to S&P. Moody's still has a Aaa rating on Rabobank, but with a negative outlook, and Fitch rates it AA+.
"We are shedding a small tear for Rabobank, which is hanging onto its one remaining triple-A from Moody's," analysts at CreditSights said.
S&P's new ratings method puts more emphasis on the health of the banking industry in the countries where the banks operate and reduces the implicit support they get, as countries have said they are less likely to bail out banks in the future.
"S&P did not say it literally, but they communicated that a bank can no longer have a triple-A rating," Rabobank's Chief Financial Officer Bert Bruggink told Dutch TV program RTL Z on Wednesday.
"Nothing is risk free. Even the best countries prove not to be risk free. In that respect I think S&P's conclusion is a right one," Bruggink said.
(Reporting by Steve Slater, Sarah White and Gilbert Kreijger. Editing by Jane Merriman)
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