Moody’s downgrades Rabobank’s long-term ratings to Aa3 with stable outlook

On 27 March 2018 Moody’s Investors Service announced the downgrade of Rabobank’s long-term debt and deposit ratings to Aa3 from Aa2 and revised their outlook to stable from negative.

The downgrade is the result of the adjustment of Rabobank’s Baseline Credit Assesment* (BCA) to a3 from a2 which, according to Moody’s, reflects the fact that despite material improvements in asset risks, capital and funding, the bank’s profitability improvement program to date, has not yet yielded sufficient benefits to withdraw the negative outlook and maintain a credit profile consistent with the previous high BCA of a2 (compared to our peers with a BCA of a2 and a3). It is Moody's view that Rabobank’s net profit ambitions, despite its strong fundamentals, are prone to low interest margins, normalising costs of credit risk and the challenges the bank faces in reducing its operating expenses.

The outlook on Rabobank’s deposit and senior unsecured debt ratings is stable because Moody’s does not anticipate any significant change in the bank’s creditworthiness over the next two-to-three years.

*Moody’s Baseline Credit Assessment (BCA) is their opinion of the probability of a bank’s standalone failure absent external support. Their BCA analysis involves three main components: a macro profile, financial factors and qualitative factors.


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