Moody’s ups DVB Bank, debt

Moody's Investors Service said it upgraded DVB Bank SE's long-term senior unsecured debt rating to Aa3 from Baa1, long-term deposit ratings to Aa1 from A2 and subordinated debt program rating to provisional A3 from provisional Ba1.

Concurrently, the agency affirmed the P-1 short-term deposit and provisional P-1 other short-term ratings.

Moody's also upgraded DVB's long-term counterparty risk assessment to Aa1(cr) from A2(cr) and affirmed the P-1(cr) short-term counterparty risk assessment.

While the b3 baseline credit assessment (BCA) is unaffected, the agency upgraded the adjusted BCA to a2 from baa3, which now includes 10 notches, instead of six previously, of rating uplift for affiliate support that is chiefly available from DVB's parent bank, DZ BANK AG Deutsche Zentral-Genossenschaftsbank (deposits Aa1 stable, senior unsecured debt Aa3 positive, BCA baa2).

Moody’s said the upgrades of DVB's adjusted BCA and therefore of the long-term ratings were prompted by DZ BANK's disclosure on Sept. 26 that it plans to establish a formal control and profit-and-loss transfer agreement with DVB, which ensures DZ BANK's absorption of any losses of DVB in 2017 and over the next five years. This P&L transfer agreement remains subject to the formal approval of DZ BANK's stakeholders in an extraordinary shareholders meeting on Nov. 2.

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