Fitch confirms that Santander Consumer Bank AG is “A-”; Stable outlook

Fitch Ratings confirmed Santander Consumer Bank SA (SCB S.A.) Long Term Issuer Default Rating (IDR) at ‘A-‘ with a Stable Outlook and Viability Rating (VR) at ‘a-‘.

A full list of rating actions can be found at the end of this rating action commentary.

Fitch removed the bank’s support rating following an update to its bank rating criteria on November 12, 2021 as it is no longer considered by Fitch to be relevant to agency coverage. In accordance with the updated criteria, we have awarded SCB AG a Shareholder Support Rating (SSR) of ‘a-‘.

Main rating factors

Support and VR Drive IDR: SCB S.A. IDRs are driven by its virtual reality and Fitch’s view of the strong support available from its ultimate parent Santander Bank, SA (Santander; A-/Stable), potentially channeled through SCB S.A. middle parent Santander Consumer Finance S.A. (SCF; A-/Stable). The stable outlook for SCB S.A. The long-term IDR reflects this on its parents.

SCB S.A. VR mirrors its leading German automotive and consumer finance franchise, which dominates its business model, earnings and risk profile, resulting in good asset quality, strong profitability and capital, funding and risk profile. adequate liquidity. The RV also factors in limited business model diversification into mortgages and SME lending, although we believe any significant growth in these asset classes would dilute SCB S.A. profitability and could weaken its risk/reward profile.

Deep integration underpins support: we consider Santander’s propensity and ability to support SCB AG so high, due to SCB S.A. deep integration, shared brand name and small size compared to the group. Automotive financing and unsecured consumer credit are the group’s core businesses. We expect Santander to increase SCB S.A. capital to support organic growth and acquisitions whenever needed, as in the past.

Profitable Business Profile: SCB S.A. Strong consumer credit interest margins and good profitability provide adequate loss absorbency and have enabled resilient financial performance in 2021, despite the pandemic. The short duration of its assets allows the bank to reprice loans relatively quickly, while maintaining controlled interest rate sensitivity.

Strong risk profile: We expect SCB S.A. strong management expertise, track record and well-tested risk management framework, underpinned by strong underwriting standards, to support General Meeting of the SCB credit quality throughout the cycle.

Resilient asset quality: strong support from the German government has mitigated the impact of the pandemic on SCB S.A. quality of loans, as among peers. We expect a moderate increase in impaired loans in 2022 as inflationary pressures and rising energy prices weigh on households, SMEs and the mobility sector. We are waiting SCB S.A. four-year average impaired loan ratio to remain below 2.5% over the medium term.

Sound profitability before depreciation: SCB S.A. is one of the few large German banks that has continued to earn its cost of capital and maintained its profitability well above the industry average. We expect risk costs to remain high in 2022 in a challenging operating environment and moderately weigh on the bank’s financial result. However, we expect the four-year average operating profit/risk-weighted assets (RWA) to remain above 2% over the next two years.

Adequate capitalization: Our assessment of SCB S.A. capitalization includes ordinary group support, as the bank relies on capital injections from the group to support significant loan or acquisition growth. The bank typically does not generate capital as it passes all of its annual profits upstream to its German intermediary parent company, based on a control and profit transfer agreement. However, SCB S.A. has some flexibility to retain part of its profits as part of the group’s capital planning.

Increasingly diversified funding: SCB AG has gradually diversified its funding profile and strengthened its liquidity cushion in recent years. Retail deposits remain the bank’s primary source of funding, despite its increasing opportunistic reliance on capital market funding and, more recently, central bank funding to reduce funding costs. Its large stock of car and consumer loans allows flexible management of cash, made up of ECB-ABS retained eligible.

Rating sensitivities

Factors that could, individually or collectively, lead to a negative rating action/downgrade:

SCB S.A. The IDRs would be downgraded if its VR was downgraded, and if we believe the availability of Santander’s extraordinary support has diminished. A downgrade of Santander VR, the sale of a significant stake in SCB S.A. or a decrease in SCB S.A. strategic importance to the group could reduce the likelihood of extraordinary support and trigger a deterioration in SCB S.A. RSS.

SCB S.A. The RV could be downgraded if the bank’s operating income fell permanently below 1.5% of RWA without any credible prospect of bringing it back above this threshold in the medium term, combined with a significant and structural deterioration in SCB S.A. asset quality. A Santander VR downgrade could also put pressure on SCB S.A. VR, as this last ordinary supporting factor, benefits from being part of the group.

Factors that could, individually or collectively, lead to positive rating action/improvement:

An upgrade of Santander’s IDRs would trigger an upgrade of SCB S.A. IDR. An upgrade of SCB S.A. VR would require an upgrade of Santander RVs as well as significant revenue diversification to SCB AG with a limited dilution of its operating result/RWA.


SCB S.A. the senior non-preferred external debt (SNP) rating is aligned with its long-term IDR, as we expect the bank to continue to meet its resolution buffer requirements with SNP and more junior-only debt.

Derivatives Counterparty Rating (DCR), Long Term Senior Preferred Debt (SP) and Long Term Deposit Rating are one notch above the long term IDR to reflect the protection of preferred creditors by the SNP and junior debt cushions. SCB S.A. issues its resolution debt buffers internally to SCF/Santander, with which it shares a resolution group. The short-term SP debt and deposit ratings of ‘F1’ are the lower of the two options corresponding to the long-term ratings of ‘A’, as the liquidity and funding score of ‘bbb+’/stable prevents higher short-term ratings.

SCB S.A. The “F2” short-term IDR is aligned with that of Santander. It is also the lower of the two options corresponding to the long-term IDR of “A-”, as its liquidity and funding score of “bbb+”/stable precludes a higher short-term IDR.


Factors that could, individually or collectively, lead to a negative rating action/downgrade:

A downgrade of SCB S.A. The IDRs would lead to a downgrade of the debt and deposit ratings of the DCR, SNP and SP. We could also downgrade these ratings by one notch on changes in the group’s resolution strategy resulting in lower protection than what we currently anticipate for this debt arising from internal group resources.

Factors that could, individually or collectively, lead to positive rating action/improvement:

An upgrade of SCB S.A. The IDRs would trigger an upgrade to its DCR, SNP and SP debt and deposit ratings as long as the bank continues to meet its resolution buffer requirements with SNP and junior debt only

Best/Worst Case Evaluation Scenario

Global credit ratings of financial institutions and covered bond issuers have a best-case scenario for a rating upgrade (defined as the 99th percentile of rating transitions, measured in the positive direction) of three notches out of a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured negatively) of four notches over three years. The full range of best-case and worst-case credit ratings for all rating categories ranges from ‘AAA‘ to ‘D’. Worst case and worst case credit ratings are based on historical performance. For more information on the methodology used to determine industry-specific best-case and worst-case scenario credit ratings, visit


The main sources of information used in the analysis are described in the applicable criteria.

Public ratings with credit link to other ratings

SCB S.A. ratings are linked to Santander and SCF ratings.

ESG considerations

Unless otherwise specified in this section, the highest level of ESG Credit materiality is a score of “3”. This means that ESG issues are credit-neutral or have minimal impact on the entity’s credit, either because of their nature or the way they are managed by the entity. For more information on Fitch’s ESG materiality scores, visit