Standard and Poor's withdraws and then reinstates credit rating on Rabobank NZ at bank's request

Standard & Poor's said on Wednesday evening it had withdrawn its credit rating on Rabobank New Zealand at the request of the bank. Late on Thursday evening Standard and Poor's said it had reinstated the AA rating with a negative outlook at Rabobank's request.  Rabobank said it had reversed the withdrawal after consultation with the Reserve Bank.

Rabobank’s New Zealand CEO Ben Russell said the bank had originally asked for the rating withdrawal on the local unit because all senior New Zealand wholesale debt issuances were undertaken by another of its entities, Rabobank Nederland NZ Branch.

“Rabobank deposits in New Zealand, including RaboDirect deposits, are guaranteed by Rabobank Nederland, which has a AA rating from S&P. The bank initially formed the view that in light of this guarantee, an independent credit rating for RNZL was not necessary. However, in consultation with the Reserve Bank of New Zealand and for regulatory reasons, Rabobank sought reinstatement of a rating for RNZL from S&P,” he said.

“This rating for RNZL has now been restored by S&P.”

S&P had Rabobank at AA with a negative outlook, having downgraded the bank - along with its Dutch parent - from its highest possible AAA rating last November (to AA with a positive outlook) when the credit rating agency applied new ratings criteria to banks.

At the time of the rating withdrawal S&P said Rabobank NZ's rating was equalised with that of its parent - Cooperatieve Centrale Raiffeisen-Boerenleenbank B.A. (Rabobank Nederland)) - reflecting an unconditional guarantee provided by Rabobank Nederland covering all the obligations of Rabobank NZ, including deposits with online banking unit RaboDirect.

S&P has the big four local banks - ANZ NZ, ASB, BNZ and Westpac - at AA-.

A Rabobank spokeswoman said earlier on Thursday because Rabobank NZ isn't an issuer under the group's medium term notes programme it doesn't require a credit rating.

"All our (debt) issuances are done under the branch entity Rabobank Nederland NZ branch, which carries the parent company rating of AA from S&P."

Late on Thursday, Standard and Poor's said the AA rating (negative outlook) rating for Rabobank NZ Ltd had been reinstated at Rabobank's request.

"The ratings on Rabobank New Zealand are equalised to that of Cooperatieve Centrale Raiffeisen-Boerenleenbank B.A. (Rabobank Nederland)) (AA/Negative/A-1+), reflecting an unconditional guarantee provided by Rabobank Nederland covering all obligations of Rabobank New Zealand," Standard and Poor's said.

Last month Moody's Investors Service cut its credit rating on both Rabobank Nederland and Rabobank NZ by two notches, citing pressures on both profitability and asset quality through an unfavourable operating environment in both the Netherlands and euro-zone. Moody's cut Rabobank to Aa2 with a stable outlook from Aaa, its highest possible rating. Moody's has ANZ NZ, ASB, BNZ and Westpac NZ a notch lower at Aa3.

(Updated with comments from Rabobank spokeswoman. Updated at 6.40 pm on Thursday after Standard and Poor's reinstated the rating at Rabobank's request. Also updated with Rabobank comment).