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      TUESDAY, 28/09/2021 - Scope Ratings UK Ltd
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      Scope upgrades Sandnes Sparebank's preferred senior unsecured debt rating to A-/Stable

      Rating upgrade reflects new seniority ranking in updated creditor hierarchy and is in line with Scope’s bank rating methodology.

      Rating action

      Scope Ratings UK Limited (Scope) has today upgraded the preferred senior unsecured debt rating of Sandnes Sparebank to A-, from BBB+. Scope has also assigned a non-preferred senior unsecured debt rating of BBB+. All ratings have a Stable Outlook.

      Rating rationale and outlook

      On 1 July 2021, the EU’s Creditor Hierarchy Directive was implemented in Norway. This follows the earlier implementation of other Bank Recovery and Resolution Directive (BRRD) provisions and introduces on a statutory basis a new class of non-preferred senior unsecured debt. Under the updated creditor hierarchy, preferred senior unsecured debt ranks above non-preferred senior unsecured debt, other subordinated debt, and capital securities.

      Scope now upgrades the rating of Sandnes Sparebank’s preferred senior unsecured debt to A-, from BBB+. This brings the rating in line with the bank’s A- issuer rating (further details below). At the same time, Scope assigns a new non-preferred unsecured debt rating of BBB+, applicable to such securities if issued. These rating actions are in line with Scope’s bank rating methodology and take into account the ranking of the different liabilities in the updated creditor hierarchy.

      Sandnes Sparebank’s issuer rating of A- with Stable Outlook is unchanged. The issuer rating continues to be based on the bank’s well-established local savings bank franchise and sound credit metrics. The Stable Outlook reflects Scope’s expectation that the bank’s operating performance will remain resilient, with earnings more than sufficient to absorb potential credit losses.

      Overview of issuer rating components

      Operating environment: Very supportive

      Business model: Focused

      Initial mapping refinement: High

      Initial mapping: bbb/bbb+

      Long-term sustainability (ESG-D): Developing

      Adjusted anchor: bbb

      Earnings capacity and risk exposures: Supportive

      Financial viability management: Comfortable

      Additional rating factors: Neutral factor

      External support: Not applicable

      Issuer rating: A-

      Stress testing & cash flow analysis
      No stress testing was performed. No cash flow analysis was performed.

      Methodology
      The methodology used for these Credit Ratings and Outlooks, (Bank Rating Methodology, 26 January 2021), is available on https://www.scoperatings.com/#!methodology/list.
      Scope Ratings GmbH and Scope Ratings UK Limited apply the same methodologies/models and key rating assumptions for their credit rating services, while Scope Hamburg GmbH’s methodologies/models and key rating assumptions are different from those of Scope Ratings GmbH and Scope Ratings UK Limited.
      Information on the meaning of each Credit Rating category, including definitions of default, recoveries, Outlooks and Under Review, can be viewed in ‘Rating Definitions - Credit Ratings, Ancillary and Other Services’, published on https://www.scoperatings.com/#!governance-and-policies/rating-scale. Historical default rates of the entities rated by Scope Ratings can be viewed in the Credit Rating performance report at https://www.scoperatings.com/#!governance-and-policies/regulatory-UK. A comprehensive clarification of Scope Ratings’ definitions of default and Credit Rating notations can be found at https://www.scoperatings.com/#governance-and-policies/rating-scale. Guidance and information on how environmental, social or governance factors (ESG factors) are incorporated into the Credit Rating can be found in the respective sections of the methodologies or guidance documents provided on https://www.scoperatings.com/#!methodology/list.
      The Outlook indicates the most likely direction of the Credit Rating if the Credit Rating were to change within the next 12 to 18 months.

      Solicitation, key sources and quality of information
      The Rated Entity and/or its Related Third Parties participated in the Credit Rating process.
      The following substantially material sources of information were used to prepare the Credit Ratings: public domain and the Rated Entity.
      Scope Ratings considers the quality of information available to Scope Ratings on the Rated Entity or instrument to be satisfactory. The information and data supporting the Credit Ratings originate from sources Scope Ratings considers to be reliable and accurate. Scope Ratings does not, however, independently verify the reliability and accuracy of the information and data.
      Prior to the issuance of the Credit Rating action, the Rated Entity was given the opportunity to review the Credit Ratings and Outlooks and the principal grounds on which the Credit Ratings and Outlooks are based. Following that review, the Credit Ratings were not amended before being issued.

      Regulatory disclosures
      These Credit Ratings and Outlook are issued by Scope Ratings UK Limited at 52 Grosvenor Gardens, London, United Kingdom, SW1W 0AU, Tel +44 20-7340-6347. The Credit Ratings and Outlooks are EU-endorsed.
      Lead analyst: Pauline Lambert, Executive Director.
      Person responsible for approval of the Credit Ratings: Dierk Brandenburg, Managing Director.
      The preferred senior unsecured debt Credit Rating/Outlook was first released by Scope Ratings on 19 December 2018. The Credit Rating/Outlook was last updated on 5 May 2021.
      The non-preferred senior unsecured debt Credit Rating/Outlook was first released by Scope Ratings on 28 September 2021.

      Potential conflicts
      See www.scoperatings.com under Governance & Policies/UK Regulation/Disclosures for a list of potential conflicts of interest related to the issuance of Credit Ratings.

      Conditions of use / exclusion of liability
      © 2021 Scope SE & Co. KGaA and all its subsidiaries including Scope Ratings GmbH, Scope Ratings UK Limited, Scope Analysis GmbH, Scope Investor Services GmbH, and Scope ESG Analysis GmbH (collectively, Scope). All rights reserved. The information and data supporting Scope’s ratings, rating reports, rating opinions and related research and credit opinions originate from sources Scope considers to be reliable and accurate. Scope does not, however, independently verify the reliability and accuracy of the information and data. Scope’s ratings, rating reports, rating opinions, or related research and credit opinions are provided ‘as is’ without any representation or warranty of any kind. In no circumstance shall Scope or its directors, officers, employees and other representatives be liable to any party for any direct, indirect, incidental or other damages, expenses of any kind, or losses arising from any use of Scope’s ratings, rating reports, rating opinions, related research or credit opinions. Ratings and other related credit opinions issued by Scope are, and have to be viewed by any party as, opinions on relative credit risk and not a statement of fact or recommendation to purchase, hold or sell securities. Past performance does not necessarily predict future results. Any report issued by Scope is not a prospectus or similar document related to a debt security or issuing entity. Scope issues credit ratings and related research and opinions with the understanding and expectation that parties using them will assess independently the suitability of each security for investment or transaction purposes. Scope’s credit ratings address relative credit risk, they do not address other risks such as market, liquidity, legal, or volatility. The information and data included herein is protected by copyright and other laws. To reproduce, transmit, transfer, disseminate, translate, resell, or store for subsequent use for any such purpose the information and data contained herein, contact Scope Ratings GmbH at Lennéstraße 5 D-10785 Berlin. 

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