Domingues’ resignation does not affect CGD’s rating, S&P states
Standard&Poor’s does not believe CGD’s risk profile will be affected by the resignation of António Domingues, because the recapitalization plan will continue until the government finds his successor.
Quite a contrast. Standard&Poor’s does not see any reason to change their opinion about Caixa Geral de Depósitos (CGD), in spite of the resignations of António Domingues and the majority of the board of directors of the public bank. The rating agency maintains the bank’s rating under positive review because they believe the recapitalization plan the Portuguese government and Brussels have agreed on will continue as is today – since António Costa, Portuguese prime minister, will soon announce who will be the new CGD chairman.
“S&P Global Ratings said today that it is maintaining on CreditWatch positive its long-term rating on Caixa Geral de Depositos S.A.”, the agency announced. “We understand that the agreement in principle that was announced in August remains in place, and that the government is working to find a replacement for CGD’s management team”, is the justification given by the agency, after DBRS placed the public bank under negative review, yesterday.
Although they are keeping things as they are, S&P, one of the three largest rating agencies in the world, says they will continue to monitor the next chapters of this story in order to understand if the changes taking place in CGD will have an impact on what was discussed with Brussels. “We will closely monitor whether the recent developments result in any strategic shifts or changes to the announced recapitalization plan, including how long it will take to materialize”, states the agency.
The agency S&P also promises to keep an eye on the new CGD administration, namely on “the new management’s capacity to deliver in a timely manner on CGD‘s strategic goals and improve its underlying profitability and asset quality”.
They end their press release by stating that, as they have recently announced, the upcoming resolution of the CreditWatch continues to depend on the formal approval by the European Commission of CGD’s recapitalization plan and the assessment to be made concerning specific details of the operation (amount and use of the injection of public capital).
If everything goes well and the risk-adjusted capital ratio (RAC ratio) continues to increase and be maintained sustainable above 5%, S&P might upgrade the current rating, BB-, they gave the public bank.
