Rating Action: Moody's concludes reviews on 9 German public-sector banks' ratings; takes action on another 6 banks' ratings

Rating Action: Moody's concludes reviews on 9 German public-sector banks'
ratings; takes action on another 6 banks' ratings
Global Credit Research - 19 Jun 2015
Actions follow conclusion of methodology-related reviews and revision of government support
considerations

Frankfurt am Main, June 19, 2015 -- Moody's Investors Service has today concluded its rating reviews on nine
Landesbanks and Savings banks and/or related group entities, which are part of Germany's (Aaa stable) sector of
public banks, Sparkassen-Finanzgruppe (S-Finanzgruppe; corporate family rating Aa2 stable). The rating agency
initiated the reviews on 17 March 2015 (see press release at https://www.moodys.com/research/Moodys-reviews-
global-bank-ratings--PR_321005) following the publication of Moody's new bank rating methodology and revisions
to Moody's government support assumptions for these banks.
The rating agency has further taken actions on the ratings of another six banking groups that were either affirmed
or unaffected previously following the publication of the new banking methodology.
In light of the new bank rating methodology, today's actions reflect the following considerations (1) the Macro
Profiles applicable to each group or bank, based on the geographic breakdown of their asset bases; (2) the
group's financial profiles and related qualitative factors; (3) the probability and strength of affiliate support from the
cross-sector mechanism of the savings banks' sector; (4) protection offered to creditors more senior in the
creditor hierarchy, as captured by Moody's Advanced Loss Given Failure (LGF) liability analysis; and (5) the
reduced likelihood of support from the German government, in case of need.
Among the actions taken today by Moody's on the total 15 affected banking groups and their related entities as
well as sector associations are the following:
- Four long-term deposit ratings were upgraded, and one downgraded
- 10 short-term deposit ratings were affirmed and three confirmed
- Four long-term bank issuer/senior unsecured debt ratings were upgraded, four were affirmed, five were
confirmed and one downgraded
- 12 baseline credit assessments (BCAs) were affirmed and 2 were upgraded
- 10 adjusted BCAs were affirmed and four were upgraded
Moody's has also assigned Counterparty Risk (CR) Assessments to a number of the banks' subsidiaries and
bank branches, in line with its new bank rating methodology.
Bank level subordinated debt and hybrid securities ratings, including backed subordinated ratings or grandfathered
debt for Landesbanks (including Portigon AG), have either been affirmed or upgraded as part of this rating action.
Moody's also affirmed the Aaa subordinated debt ratings of Landwirtschaftliche Rentenbank that benefit from a
guarantee from the German government. Subsequently, Moody's has withdrawn the outlooks for all subordinated
and hybrid instrument ratings for its own business reasons. For more information, please refer to Moody's
Investors Service's Policy for Withdrawal of Credit Ratings, available at moodys.com.
Outlooks, which provide an opinion on the likely rating direction over the medium term, are now assigned only to
long-term deposit and issuer/senior unsecured debt ratings. Where outlooks are either positive (for most deposit
ratings) or negative (for most debt ratings), outlooks primarily reflect prospective changes to insolvency legislation
affecting the seniority of depositors and senior unsecured debt investors in Germany. The legislation, if
implemented, could subordinate senior debt to deposits to the benefit of depositors and to the detriment of senior
unsecured creditors.
Please click on the following link to access a full list of affected credit ratings. This list is an integral part of this
press release and identifies each affected issuer: http://www.moodys.com/viewresearchdoc.aspx?

docid=PBC_182453
Moody's has also published a Special Comment entitled "Key Analytic Considerations in Our Rating Actions on
German Banks", providing more background on today's rating action. Subscribers can access the report under
the following link: http://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1005805.
Please refer to this link for the new methodology: http://www.moodys.com/viewresearchdoc.aspx?
docid=PBC_179038
RATINGS RATIONALE
The new methodology includes a number of elements that Moody's has developed to help accurately predict bank
failures and determine how each creditor class is likely to be treated when a bank fails and enters resolution.
These new elements capture insights gained from the crisis and the fundamental shift in the banking industry and
its regulation.
(1) THE "STRONG" TO "VERY STRONG -" BANK-SPECIFIC MACRO PROFILES
The Macro Profile constitutes an assessment of the macroeconomic environment in which a bank operates. Given
the geographic scope of their operations, the Landesbanks in particular have a more international footprint, with
many of them having a substantial portion of their exposures in markets other than their home country. Even
though the country-specific Macro Profile for Germany is "Very Strong -", the bank-specific Macro Profile scores
are in selected cases one to two categories lower (eight Very Strong -, five Strong +, and one Strong), given that
the macroeconomic conditions in the banks' home country are stronger than those of the other countries in which
they operate.
German banks benefit from operating in an environment with very high economic, institutional and government
financial strength and very low susceptibility to event risk. Low and declining private sector debt and a stable
house price cycle support credit conditions. Funding conditions benefit from a strong domestic deposit base and
good wholesale market access. However, operating conditions for the German banking system are constrained
by high fragmentation in an over-saturated market, low fee income generation and intensifying competition for
domestic business.
(2) BCAs REFLECT THE INDIVIDUAL BANKS' STRENGTH AND WEAKNESSES WITH DIVERGENCES IN
THE SECTOR
Following its review, Moody's says that the individual entity's capitalisation, risk profile, profitability and funding
situation determine the wide range of BCAs: there are three entities in the 'b' category, six in the 'ba', four in the
'baa' and one in the 'a' category. Amongst the key distinguishing factors are sector concentrations to higher-risk
assets like shipping, commercial real estate (CRE) or cyclical industries, combined with high leverage. Overall
improving capitalisation levels are frequently accompanied by modest profitability, with the low-yield environment
exacerbating competitive pressure. However, the Landesbanks' access to S-Finanzgruppe's ample sector funds
largely offsets their capital market funding dependence.
3) HIGH TO VERY HIGH SECTOR SUPPORT REDUCES RISKS FOR ALL CLASSES OF DEBT
The savings banks and Landesbanks benefit from cross-sector support from S-Finanzgruppe. Cross-sector
support materially reduces the probability of default, as it would be available to stabilise a distressed member
bank, and not just compensate for losses in resolution.
Moody's continues to consider the readiness of the sector to support its members to be "high", to "very high".
Affiliate support provides two to four notches of uplift, as reflected in the individual banks' or banking group's
adjusted BCAs.
The ownership structures of the individual banks or banking groups determine the assigned level of support --
either "high" or "very high" -- with full S-Group ownership or affiliation combined with the membership in the cross-
liability scheme constituting "very high" support. The "high" support, assigned to most Landesbanks, reflects
cross-liability scheme membership and only partial ownership by S-Group members. Typically, federal state
governments and/or city states are co-owners. This increases the complexity in a scenario where support might
be needed especially in the context of the new legal framework, which limits the use of tax payer's money for bank
support without taking resolution measures on the investor side.
4) PROTECTION OFFERED TO DEPOSITORS AND SENIOR CREDITORS AS CAPTURED BY MOODY'S

ADVANCED LGF LIABILITY ANALYSIS.
German banks are subject to the EU's Bank Resolution and Recovery Directive (BRRD), which Moody's
considers to be an Operational Resolution Regime. Accordingly, Moody's applies its Advanced LGF analysis to
German banks' liability structures, thereby mostly applying its standard assumptions. These assumptions include
a residual tangible common equity of 3%, losses post-failure of 8% of tangible banking assets, a 25% run-off in
junior wholesale deposits, a 5% run-off in preferred deposits, and a 25% probability of deposits being preferred to
senior unsecured debt.
The Advanced LGF analysis results generally in a "very low" loss-given-failure for long-term junior deposits as
well as senior unsecured debt ratings, reflecting the banks' substantial volume of deposit funding as well as the
amount of senior unsecured debt and securities more subordinated to it.
The entities' long-term deposit ratings benefit from two notches of uplift in the LGF analysis (except HSH
Nordbank which benefits from three notches of uplift and Kreissparkasse Koeln, which does not benefit from any
uplift in the LGF analysis). Senior unsecured debt/issuer ratings benefit from the high level of protection they
receive from the significant volume of senior unsecured debt, and the resulting "very low" loss given failure -
generally resulting in two notches of uplift.
For more information on Moody's LGF analysis and a discussion of the differences in creditor hierarchies Moody's
"How Resolution Frameworks Drive Our Creditor Hierarchies" at
https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1003760?docid=PBC_1003760 (in
addition to the methodology itself) and "Germany considers changes to insolvency hierarchy of bank creditors" at
https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1004088
(5) REDUCED LIKELIHOOD OF GOVERNMENT SUPPORT
Following the introduction of the BRRD, Moody's has also lowered its expectations about the degree of support
that the government might provide to a bank in Germany in the event of need. However, low or very low expected
loss assumptions under the new LGF framework and/or higher adjusted BCAs either fully or even more than offset
the impact on ratings.
With the implementation of bank resolution legislation, Moody's has either eliminated or lowered its assumption
about the probability of government support for the banks in the EU. That said, given its size on a consolidated
basis, Moody's considers the S-Finanzgruppe as systemically relevant. The agency therefore attributes a
"moderate" probability of German government support for all members of the sector, in line with support
assumptions for other systemically relevant banking groups in Europe. The agency therefore still includes one
notch of government support uplift in the senior debt and deposits ratings of those Landesbanks and savings
banks that are incorporated in Germany.
RATIONALE FOR THE OUTLOOK ON DEBT AND DEPOSIT RATINGS
The different outlooks on deposits and debt primarily reflect the potential for legislation in Germany that could
subordinate senior debt to deposits to the benefit of depositors and to the detriment of senior unsecured creditors.
The corresponding draft law, which proposes to modify the insolvency order laid out in the German Banking Act
(KWG) is subject to the ongoing parliamentary process in Germany. If enacted, depositors would - in insolvency
as well as in bail-in - benefit from the subordination of senior unsecured debt instruments, reducing further the
loss-given-failure expectations for deposits.
In contrast, the subordination of senior unsecured debt instruments would increase the loss-given-failure
expectations for senior debt instruments, offering lower protection for senior bondholders.
--- BANK SPECIFIC ANALYTIC FACTORS
--BAYERISCHE LANDESBANK (BayernLB)
The affirmation of BayernLB's A3 long-term deposit and senior unsecured debt and issuer ratings incorporates (1)
the affirmation of the bank's ba2 BCA; (2) the affirmation at baa3 of the adjusted BCA which incorporates high
affiliate support and two notches of cross-sector support uplift from S-Finanzgruppe; (3) the results of Moody's
LGF analysis; and (4) the unchanged "moderate" government support assumptions of one notch.
BayernLB's affirmed ba2 BCA reflects its overall satisfactory financial profile and in particular its sound capital

metrics, which are strong compared with those of similarly rated banks. The BCA further takes into account the
requirement to repay EUR2.3 billion of capital to the Free State of Bavaria (Aaa stable) by end-2017 and, although
significant provisions have already been set aside, the tail risks relating to potential legal obligations towards its
former subsidiary - Austria's Heta Asset Resolution AG (Heta; Carinthian-state-guaranteed senior unsecured debt
Ca negative). The limited visibility of the bank's future risk-adjusted profitability and capital generation arising from
the ongoing overhaul of the business model will likely remain a rating constraint for some time.
Under Moody's Advanced LGF analysis, BayernLB's long-term deposit and senior unsecured debt ratings take
into account a very low loss-given-failure for senior unsecured debt and wholesale deposits, leading Moody's to
two notches of uplift above BayernLB's baa3 Adjusted BCA.
The outlook on the long-term deposit rating is positive and the outlook on the long-term senior unsecured debt
rating is negative, indicating that a modified insolvency order in Germany would place diverging pressures on
BayernLB's senior debt and deposit ratings.
--BERLIN HYP AG
The confirmation of Berlin Hyp's A2 long-term deposit and senior unsecured debt ratings reflects (1) the affirmation
of the bank's ba2 BCA; (2) the upgrade of the adjusted BCA to baa2, thereby incorporating "very high" affiliate
support -- given that Berlin Hyp is a fully owned group member -- resulting in three notches of cross-sector
support uplift from S-Finanzgruppe; (3) the result of Moody's LGF analysis; and (4) Moody's reduced "moderate"
government support assumptions, resulting in one notch of rating uplift, from four notches previously.
Berlin Hyp's BCA of ba2 reflects the bank's satisfactory risk-adjusted capitalisation as well as its established
covered bond funding franchise, and its stable profitability and earnings contribution within the wider Landesbank
Berlin Holding (LBBH) group. However, the bank's high-risk concentrations in the CRE lending business and its
high leverage constrain the BCA and might mean that business model adjustments are necessary to comply with
future leverage requirements.
Under Moody's Advanced LGF analysis, Berlin Hyp's long-term deposit and senior unsecured debt ratings take
into account the very low loss-given-failure for the bank group's wholesale deposits and debt based on the
substantial volume of senior unsecured debt and deposits themselves, leads to a two-notch uplift from the baa2
adjusted BCA.
The outlook on the long-term deposit rating is positive and the outlook on the long-term senior unsecured debt
rating is negative, indicating that a modified insolvency order in Germany would place diverging pressures on
Berlin Hyp's senior debt and deposit ratings.
--DEKABANK DEUTSCHE GIROZENTRALE (DekaBank)
The one-notch upgrade of DekaBank's long-term deposit and senior unsecured debt ratings to Aa3 reflects (1) the
affirmation of the bank's baa2 BCA; (2) the affirmation of the bank's adjusted BCA of a3, thereby incorporating
"very high" affiliate support -- given that DekaBank is a fully owned group member -- which continues to result in
two notches of rating uplift; (3) the results of Moody's LGF analysis; and (4) Moody's reduced "moderate"
government support assumptions, resulting in one notch of rating uplift instead of two notches previously.
The affirmation of DekaBank's baa2 BCA reflects the group's modest asset risk, satisfactory regulatory capital
ratios and strong funding position, but also the constraints of its considerable balance-sheet leverage. The BCA
level incorporates Moody's expectation that DekaBank will address this weakness and gradually reduce its
leverage.
Under Moody's Advanced LGF analysis, DekaBank's long-term deposit and senior unsecured debt ratings take
into account their very low loss-given-failure because of the group's high volume of senior unsecured debt
outstanding as well as deposits, leading to a two-notch uplift respectively from the bank's a3 adjusted BCA.
The outlook on the long-term deposit rating is positive and the outlook on the long-term senior unsecured debt
rating is negative, indicating that a modified insolvency order in Germany would place diverging pressures on
DekaBank's senior debt and deposit ratings.
--HSH NORDBANK AG (HSH)
The confirmation of HSH's long-term unsecured debt and deposit ratings at Baa3 reflects (1) the two-notch
upgrade of the bank's BCA to b3; (2) the equivalent upgrade of its adjusted BCA to b1 as Moody's assessment of

a high probability of HSH receiving affiliate support continues to result in two notches of rating uplift; (3) the results
of Moody's LGF analysis, leading to three notches of uplift from the b1 adjusted BCA; together offsetting (4)
Moody's materially reduced "moderate" government support assumptions, equivalent to one notch of rating uplift,
from six notches previously.
The upgrade of HSH's BCA to b3 reflects the mitigants to the group's high asset risk afforded by the EUR10 billion
risk shield on a large portion of its assets, provided by the bank's public-sector owners, and HSH's adequate
funding profile and liquidity position. However, HSH's limited access to capital, weak and unpredictable earnings
and the resulting poor capital retention capacity constrain the BCA. In addition, the bank's continued focus on
cyclical asset-based finance activities and the opacity afforded by the complex structure of support from its
majority owners weigh on the BCA, and are reflected in a negative qualitative BCA-adjustment by two notches.
Under Moody's Advanced LGF analysis, HSH's long-term deposit and senior unsecured debt ratings take into
account their very low loss-given-failure because of the group's high volume of subordinated and senior
unsecured debt outstanding, leading to a three notch uplift respectively from the bank's b1 adjusted BCA.
The outlook on the Baa3 long-term deposit and senior unsecured debt ratings is negative, indicating several
downside risks that may negatively affect HSH's long-term ratings, including (1) its weak fundamental strength
and vulnerability to market stress or shocks; (2) the uncertainties linked to the still-pending decision by the
European Commission on state aid; (3) possible changes in HSH's liability structure as large amounts of senior
unsecured debt are scheduled to mature in 2015, which may raise the severity of loss for bond holders in
resolution, as assessed in the LGF analysis; and (4) prospects of a modified insolvency order in Germany, which
may place diverging pressures on HSH's senior debt and deposit ratings.
--LANDESBANK BADEN-WUERTTEMBERG (LBBW)
The one-notch upgrade of LBBW's long-term deposit and senior unsecured debt ratings to A1 incorporates (1) the
affirmation of the bank's baa3 BCA; (2) the affirmation of its baa1 adjusted BCA as Moody's assessment of a high
probability of LBBW receiving affiliate support from S-Finanzgruppe continues to result in two notches of rating
uplift; (3) the results of Moody's LGF analysis, partially offset by; (4) Moody's reduced "moderate" government
support assumptions, resulting in one notch of rating uplift, from two notches previously.
The affirmation of LBBW's baa3 BCA at the low-end of Moody's scorecard range indicates potential upside over
Moody's 12-18 month outlook horizon. This reflects the rating agency's anticipation of a further improvement in the
bank's financial profile, most notably with regards to capital and leverage ratios and further supported by visible
improvements in the bank's underlying profitability. The rating remains constrained by the bank's limited ability to
meaningfully improve its modest financial performance as well as LBBW's high exposures to domestic and
international corporate and CRE portfolios that may exert pressure on the bank's profitability and, potentially,
capital ratios in a highly adverse scenario.
For LBBW, Moody's LGF analysis indicates a very low loss-given-failure for senior unsecured debt and deposits,
leading to a two-notch uplift on LBBW's wholesale deposits as well as its senior unsecured debt from its baa1
adjusted BCA.
The outlook on the long-term deposit ratings is positive and the outlook on the long-term senior unsecured debt
ratings is negative, indicating that a modified insolvency order in Germany would place diverging pressures on
LBBW's senior debt and deposit ratings. The negative effect on the bank's senior unsecured debt ratings could be
exacerbated by the maturity of large amounts of grandfathered debt by year-end 2015, further reducing the volume
of bail-in-able senior instruments.
--LANDESBANK BERLIN AG
The confirmation of Landesbank Berlin AG's (LBB) A1 long-term deposit and issuer/senior unsecured debt ratings
reflects (1) the affirmation of the bank's ba1 BCA; (2) the one-notch upgrade of the adjusted BCA to baa1, thereby
incorporating very high affiliate support and three notches of cross-sector support uplift from S-Finanzgruppe as a
fully owned group member; (3) the results of Moody's LGF analysis; together more than fully offsetting (4) Moody's
reduced "moderate" government support assumptions, reflected in one notch of rating uplift instead of four notches
previously.
LBB's ba1 BCA is underpinned by the group's 'Very Strong-' Macro profile and its comfortable funding profile. At
the same time, the standalone BCA is constrained by the bank's modest, yet stable, financial performance.
For LBB, Moody's LGF analysis indicates a very low loss-given-failure for the bank group's wholesale deposits

base on the substantial volume of senior unsecured debt and deposits themselves, leads to a two-notch rating
uplift from the baa1 adjusted BCA.
The outlook on the long-term deposit rating is positive and the outlook on the long-term senior unsecured debt
rating is negative, indicating that a modified insolvency order in Germany would place diverging pressures on
LBB's senior debt and deposit ratings.
--LANDESBANK HESSEN-THUERINGEN GZ (Helaba)
The one-notch upgrade of Helaba's long-term deposit and senior unsecured debt ratings to A1 incorporates (1) the
affirmation the bank's baa3 BCA; (2) the affirmation of its baa1 adjusted BCA, as Moody's assessment of a high
probability of Helaba receiving affiliate support from S-Finanzgruppe continues to result in two notches of rating
uplift; (3) the results of Moody's LGF analysis; partially offset by (4) Moody's reduced "moderate" government
support assumptions, resulting in one notch of rating uplift, from two notches previously.
The affirmation of the BCA reflects (1) the group's improved capital and leverage ratios; (2) its moderate asset-risk
profile, displaying a sound long-run loan-loss performance; and (3) its comfortable funding profile. At the same
time, the standalone BCA is constrained by the bank's substantial exposure to international CRE markets and the
bank's modest, yet improving and solid, financial performance.
For Helaba, Moody's LGF analysis indicates a very low loss-given-failure for senior unsecured debt and deposits,
leading to a two-notch uplift on Helaba's wholesale deposits as well as its senior unsecured debt from its baa1
adjusted BCA.
The outlook on the bank's long-term deposit ratings is positive and the outlook on the long-term senior unsecured
debt rating is stable, indicating that a modified insolvency order in Germany would place positive pressure on
Helaba's long-term deposit ratings.
--LANDESBANK SAAR (SaarLB)
The affirmation of SaarLB's long-term deposit rating of A3 incorporates (1) the affirmation of the bank's ba2 BCA;
(2) the affirmation at baa3 of the adjusted BCA, as Moody's assessment of a high probability of SaarLB receiving
affiliate support from S-Finanzgruppe continues to result in two notches of rating uplift; (3) the results of Moody's
LGF analysis; which, together, fully offset (4) the unchanged "moderate" government support assumptions of one
notch.
SaarLB's ba2 BCA is underpinned by (1) a higher share of profitability stemming from more stable business lines
than in the past; (2) a successful reduction of non-core activities without any further profitability impairments; (3)
the bank's good liquidity and efficiency; and (4) SaarLB's robust asset quality (to date). However, SaarLB is
vulnerable to adverse events given significant sector concentrations in the areas of CRE and project finance with
a focus on renewable energies, which is still a nascent and untested industry. In relation to the above-mentioned
concentration risks, in Moody's view SaarLB's capital cushion appears limited, and exposes the bank to event
risks. The level of Basel III-compliant common equity is improving, but remains relatively limited in the context of
the bank's risk profile.
For SaarLB, Moody's LGF analysis indicates a very low loss-given-failure for the bank's wholesale deposits
based on the substantial volume of senior unsecured debt and deposits themselves, leading to a two-notch uplift
for deposits from the baa3 adjusted BCA.
The positive outlook on the bank's long-term deposit ratings indicates that a modified insolvency order in Germany
would place positive pressure on SaarLB's long-term deposit rating.
--NORDDEUTSCHE LANDESBANK GZ (NORD/LB)
The A3 long-term deposit and issuer/senior unsecured debt ratings of NORD/LB were affirmed, reflecting (1) the
affirmation of the bank's ba2 BCA; (2) the affirmation of its baa3 adjusted BCA, as Moody's assessment of a high
probability of NORD/LB receiving affiliate support from S-Finanzgruppe continues to result in two notches of rating
uplift; (3) the results of Moody's LGF analysis; together fully offsetting (4) the unchanged "moderate" government
support assumptions of one notch.
The affirmation of the bank's ba2 BCA reflects continued asset-quality deterioration in the bank's concentrated
shipping loan book and capital ratios that are sensitive to US dollar currency volatility. In addition, the bank
displays a low level of risk-adjusted profitability compared with its global peers. The BCA also takes NORD/LB's

solid funding and liquidity position into account.
For NORDLB, Moody's LGF analysis indicates a very low loss-given-failure for the bank's wholesale debt and
deposits based on the substantial volume of senior unsecured debt themselves, leading to a two-notch uplift for
deposits from the baa3 adjusted BCA.
NORD/LB's long-term debt outlook is negative and reflects (1) downward pressure on the bank's fundamental
credit profile; and (2) the negative pressure resulting from the proposed modified insolvency order in Germany.
The bank's long-term deposit rating outlook is stable and considers that a modified insolvency order in Germany
would create upward rating pressure that counterbalances the downward pressure on the bank's fundamental
profile
-- BREMER LANDESBANK KREDITANSTALT OLDENBURG GZ (Bremer LB)
The affirmation of Bremer LB's long-term deposit and issuer/senior unsecured debt ratings at Baa2 incorporates;
(1) the affirmation of the BCA at b1; (2) the affirmation at ba2 of the adjusted BCA as Moody's assessment of a
high probability of Bremer LB receiving affiliate support from S-Finanzgruppe continues to result in two notches of
rating uplift; (3) the results of Moody's LGF analysis; and (4) the unchanged "moderate" government support
assumptions of one notch.
The affirmation of the bank's b1 BCA reflects the bank's vulnerability to its relatively large exposures to the
cyclical shipping industry, which creates pressure for the bank's earnings and capitalisation. The affirmation also
reflects dependence on wholesale funding, mitigated by sufficient liquidity reserves and a strong domestic investor
base.
For its LGF analysis, Moody's assumes that Bremer LB, as a majority owned domestic subsidiary, would be
resolved together with NORD/LB. Therefore, the same LGF notching applies to NordLB as to Bremer LB, affording
two notches of uplift from the bank's ba2 adjusted BCA.
The outlook for Bremer LB's long-term deposit rating is positive, whereas the outlook for the long-term debt ratings
remains stable, indicating that a modified insolvency order in Germany would place positive pressure on Bremer
LB's long-term deposit rating.
-- DEUTSCHE HYPOTHEKENBANK AG (Deutsche Hypo)
The one-notch upgrade of Deutsche Hypo's long-term deposit and senior unsecured debt ratings to A3 reflects (1)
the affirmation of the BCA at b1; (2) the affirmation of the bank's baa3 adjusted BCA based on unchanged
assumptions for parental support from NORD/LB ; (3) the results of Moody's LGF analysis; together partially
offsetting (4) Moody's reduced "moderate" government support assumptions, reflected in one notch of rating uplift,
from four notches previously.
The affirmation of the bank's b1 BCA reflects good asset quality from core on-balance-sheet lending compared
with its peers, which partly mitigates Deutsche Hypo's risk concentrations in its CRE lending business as well as
single-name concentrations. The bank benefits from access to cost-efficient funding based on its covered bond
franchise. Deutsche Hypo is exempt from stand-alone minimum capital requirements; however, its BCA is
constrained by the vulnerability of consolidated capital ratios of its owner, NORD/LB, to macroeconomic
developments.
For its LGF analysis, Moody's assumes that Deutsche Hypo, as fully-owned domestic subsidiary, would be
resolved together with NORD/LB. Therefore, the same LGF notching applies to NORD/LB as to Deutsche Hypo,
affording two notches of uplift from the bank's baa3 adjusted BCA.
Deutsche Hypo's long-term debt outlook is negative and reflects (1) downward pressure on the fundamental credit
profile of NORD/LB; and (2) the negative pressure resulting from the proposed modified insolvency order in
Germany. The bank's long-term deposit rating outlook is stable and considers that a modified insolvency order in
Germany would create upward rating pressure that counterbalances the downward pressure on the parent's
fundamental profile.
--SPARKASSENVERBAND BADEN-WURTTEMBERG (SVBW)
The confirmation of SVBW's Aa3 issuer ratings takes into account positive effects from considerations regarding
SVBW's intrinsic financial strength as well as its members' liability structures, offset by the reduction of Moody's
government support assumptions to "moderate" from " very high" previously.

The rating agency's assessment takes into account the strong legal and statutory links between SVBW and its 53
member savings banks. The savings banks are fully and jointly liable for SVBW's liabilities, and are obliged to
cover any losses that SVBW may incur. The rating thus also reflects the sound commercial and financial profile of
the savings banks in the region, characterised by strong underlying profitability, good capitalisation and significant
capital reserves. Furthermore, the rating takes into account SVBW's low-risk profile and conservative financial
positioning.
By assessing the association's financial strength based on the aggregated financials of the local savings banks,
Moody's performs an LGF analysis consistent with the BCA approach. Whilst SVBW is a bankruptcy-remote
public-law entity, its member banks are subject to the BRRD. In Moody's view, SVBW is economically
indistinguishable from the savings banks both pre- and post-failure. As such, Moody's bases its LGF analysis on
the aggregated balance sheet, as a going concern, and indicates a moderate low loss-given-failure for senior
unsecured debt, and thus SVBW's issuer ratings.
The negative outlook on SVBW's issuer rating reflects the proposed changes to the German insolvency law,
which, if implemented as planned, would subordinate senior debt to the detriment of senior unsecured creditors,
and thus SVBW's issuer rating.
--SPARKASSEN FINANZGRUPPE (S-Finanzgruppe)
The affirmation of the Aa2 CFR of S-Finanzgruppe with a stable outlook reflects (1) the affirmation of the group's
a2 BCA; (2) the results of Moody's LGF analysis; and (3) the unchanged "moderate" government support
assumptions of one notch.
S-Finanzgruppe's BCA of a2 is supported by the savings banks' low-risk profiles, overall improving capitalisation
and strong funding situation. The rating also captures the weaker business profiles of the Landesbanks (regional
public-sector banks), which continue to benefit from the cross-sector joint-liability scheme (Haftungsverbund).
For S-Finanzgruppe, the combined effects of moderate government support and the special characteristics of the
CFR have a neutralising effect. A CFR is assigned to a corporate family as if the entity had a single class of debt.
This has positive effects stemming from Moody's LGF analysis, which takes into account the severity of loss
faced by the different liability classes across the liability structure. Under the CFR assumption of a single class of
debt, a simulated LGF analysis indicates a very low loss-given-failure, which compensates for a reduction in
Moody's government support assumption to moderate, equivalent to a one-notch uplift.
--KREISSPARKASSE KOELN (KSK Koeln)
The one-notch downgrade of KSK Koeln's long-term deposit and senior unsecured debt ratings to A1 incorporate
(1) the affirmation of the bank's baa1 BCA; (2) the affirmation at a2 of the adjusted BCA, thereby incorporating very
high affiliate support and the unchanged two notches of cross-sector support uplift from S-Finanzgruppe; (3) the
results of Moody's LGF analysis; together not fully offsetting (4) Moody's reduced "moderate" government support
assumptions, reflected in one notch of rating uplift instead of two notches previously.
The affirmation of the bank's baa1 BCA reflects (1) strong liquidity based on a broad retail deposit base; (2)
improved capital ratios and a declining trend in problem loans; which mitigate (3) risk concentrations in the local
real-estate market.
For KSK Koeln, Moody's LGF analysis indicates a moderate loss-given-failure for the bank's wholesale deposits
because of the moderate volume of wholesale deposits and senior unsecured debt, leading to no uplift for deposits
from the a2 adjusted BCA.
The outlook on the bank's long-term deposit ratings is stable and the outlook on the long-term senior unsecured
debt rating is negative, indicating that a modified insolvency order in Germany would place negative pressure on
KSK Koeln's long-term debt rating.
--SPARKASSE KOELN BONN (SKKB)
The confirmation of SKKB's long-term deposit and senior unsecured debt ratings at A1 reflects (1) a one-notch
upgrade of the bank's BCA to ba2; (2) the two-notch upgrade of its adjusted BCA to baa1 which is underpinned by
the higher BCA and four notches (instead of three previously) of affiliate support, which reflects a "very high"
cross-sector support probability from S-Finanzgruppe; (3) the results of Moody's LGF analysis; which fully offsets
(4) Moody's reduced "moderate" government support assumptions, equivalent to one notch of rating uplift instead

of five notches previously.
The upgrade of SKKB's BCA to ba2 reflects the bank's gradually improving asset quality, its progress in retaining
earnings and bolstering its still-weak common equity base as well as its sound funding structure and liquidity
position.
Under Moody's Advanced LGF analysis, SKKB's long-term deposit and senior unsecured debt ratings take into
account the very low loss-given-failure because of the group's high volume of subordinated and senior unsecured
debt outstanding, leading to a two-notch uplift respectively from the bank's baa1 adjusted BCA.
The positive outlook on the bank's long-term deposit ratings and the negative outlook on the bank's senior
unsecured debt ratings indicate that a modified insolvency order in Germany would place diverging pressures on
SKKB's debt and deposit ratings.
RATIONALE FOR COUNTERPARTY RISK ASSESSMENTS
Moody's has also assigned CR Assessments to a number of rated Landesbanks and savings banks, including
their rated subsidiaries and branches. CR Assessments are opinions of how counterparty obligations are likely to
be treated if a bank fails, and are distinct from debt and deposit ratings in that they (1) consider only the risk of
default rather than expected loss and (2) apply to counterparty obligations and contractual commitments rather
than debt or deposit instruments. The CR Assessment is an opinion of the counterparty risk related to a bank's
covered bonds, contractual performance obligations (servicing), derivatives (e.g., swaps), letters of credit,
guarantees and liquidity facilities.
The CR Assessment takes into account the issuer's standalone strength as well as the likelihood of affiliate and
government support in the event of need, reflecting the anticipated seniority of these obligations in the liabilities
hierarchy. The CR Assessment also incorporates other steps authorities can take to preserve the key operations
of a bank, should it enter a resolution.
For the affected banks, the CR Assessment, prior to government support, is in most cases positioned three
notches above the Adjusted BCA and therefore above the senior unsecured and deposit ratings, reflecting
Moody's view that its probability of default is lower than that of senior unsecured debt and deposits. Moody's
believes that senior obligations represented by the CR Assessment will be more likely preserved in order to limit
contagion, minimize losses and avoid disruption of critical functions.
For most of the affected banks, the CR Assessments also benefit from government support in line with Moody's
support assumptions on deposits and senior unsecured debt. This reflects Moody's view that any support
provided by governmental authorities to a bank which benefits senior unsecured debt or deposits is very likely to
benefit operating activities and obligations reflected by the CR Assessment as well, consistent with Moody's belief
that governments are likely to maintain such operations as a going-concern in order to reduce contagion and
preserve a bank's critical functions.
WHAT COULD CHANGE THE RATINGS UP/DOWN
The banks' BCAs could be upgraded following (1) a reduction (or mitigation) of asset risk, including market risk;
(2) a strengthening of common equity levels, in particular leverage ratios; and (3) greater stability of profits for
those banks whose profits have previously shown volatility.
The banks' BCAs could be downgraded following (1) a material deterioration in its asset quality, particularly for
those banks that display risk concentrations; (2) a failure to improve leverage at an appropriate pace as higher
regulatory requirements are introduced or phased in; and/or (3) a material deterioration of profits, which have
recently benefitted from very low risk charges.
Furthermore, alterations in the bank's liability structure may change the amount of uplift provided by Moody's LGF
analysis and lead to a higher or lower notching from the banks' Adjusted BCAs, thereby affecting their debt and/or
deposit ratings.
The prospective change in insolvency legislation in Germany that aims to subordinate senior unsecured debt to
deposits in resolution would -- if implemented -- place downward pressure on senior unsecured debt ratings (if not
compensated by additional subordination) and upwards pressure on deposit ratings.
PRINCIPAL METHODOLOGIES

The principal methodology used in these ratings, except for Landwirtschaftliche Rentenbank, was Banks
published in March 2015. For Landwirtschaftliche Rentenbank, the methodology used was Government-Related
Issuers published in October 2014.Please see the Credit Policy page on www.moodys.com for a copy of these
methodologies.
REGULATORY DISCLOSURES
Please click on this link (http://www.moodys.com/viewresearchdoc.aspx?docid=PBC_182453) for the List of
Affected Credit Ratings. This list is an integral part of this Press Release and provides, for each of the credit
ratings covered, Moody's disclosures on the following items:
• Unsolicited ratings
• Non participating issuers
• [EU only] participation in unsolicited ratings
• Person approving the credit rating
• Releasing office
For ratings issued on a program, series or category/class of debt, this announcement provides certain regulatory
disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class
of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance
with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain
regulatory disclosures in relation to the rating action on the support provider and in relation to each particular rating
action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings,
this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in
relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where
the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner
that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for
the respective issuer on www.moodys.com.
For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this rating
action, and whose ratings may change as a result of this rating action, the associated regulatory disclosures will
be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to
jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.
The following information supplements Disclosure 10 ("Information Relating to Conflicts of Interest as required by
Paragraph (a)(1)(ii)(J) of SEC Rule 17g-7") in the regulatory disclosures made at the ratings tab on the
issuer/entity page on www.moodys.com for each credit rating:
For identification of which credit ratings have payors that have or have not paid Moody's for services other than
determining a credit rating in the most recently ended fiscal year, please see the detailed list under the following
link: http://www.moodys.com/viewresearchdoc.aspx?docid=PBC_182453. The list is an integral part of this press
release.
The ratings of rated entity Bremer Landesbank Kreditanstalt Oldenburg GZ were initiated by Moody's and were not
requested by these rated entities.
The rated entity Bremer Landesbank Kreditanstalt Oldenburg GZ or related third parties did not participate in the
rating process. Moody's was not provided, for purposes of the rating, access to books, records and other relevant
internal documents of the rated entity or related third party.
The below contact information is provided for information purposes only. Please see the ratings tab of the issuer
page at www.moodys.com, for each of the ratings covered, Moody's disclosures on the lead analyst and the
Moody's legal entity that has issued the ratings.
Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating
outlook or rating review.
Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal
entity that has issued the rating.

Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for
each credit rating.
Andrea Wehmeier
Vice President - Senior Analyst
Financial Institutions Group
Moody's Deutschland GmbH
An der Welle 5
Frankfurt am Main 60322
Germany
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454
Carola Schuler
MD - Banking
Financial Institutions Group
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454
Releasing Office:
Moody's Deutschland GmbH
An der Welle 5
Frankfurt am Main 60322
Germany
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454

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