Fitch Ratings has revised Banco BPI S.A.'s (Banco BPI) Outlook to Stable from Negative, while affirming the bank's Long-Term Issuer Default Rating (IDR) at 'BBB'.
The Outlook revision reflects a recent similar rating action on CaixaBank, S.A.'s Outlook to Stable ('Fitch Revises CaixaBank's Outlook to Stable; Affirms at 'BBB+'), as the IDR of Banco BPI is based on institutional support from CaixaBank. Banco BPI's Viability Rating (VR) of 'bb+' is unaffected by today's rating action.
A full list of rating actions is detailed below.
Unless noted below, the key rating drivers for Banco BPI are those outlined in our Rating Action Commentary published in October 2020 ('Fitch Affirms Banco BPI at 'BBB'; Outlook Negative').
Key Rating Drivers
IDR, SUPPORT RATING, SENIOR PREFERRED DEBT, AND DEPOSIT RATINGS
The IDRs, senior preferred debt rating and Support Rating (SR) of Banco BPI reflect Fitch's view of a high probability of support from the bank's Spanish parent company, CaixaBank (BBB+/Stable/bbb+), in case of need.
Banco BPI's Long-Term IDR is notched down once from CaixaBank's Long-Term IDR to reflect Fitch's view that Banco BPI's activities in Portugal are strategically important to the group, although not as core as the Spanish operations. This is demonstrated by CaixaBank's longstanding investment in Banco BPI, which has kept its own commercial brand, and efforts to deepen commercial and operational integration within its parent. The inclusion of Banco BPI within CaixaBank's resolution scope supports intra-group funding and capital fungibility and reinforces our view that institutional support would be forthcoming, should it be needed.
Banco BPI's long-term senior preferred debt and deposit ratings are rated one notch above the bank's Long-Term IDR to reflect the protection that accrues from buffers of junior and senior non-preferred debt in CaixaBank's resolution scope. This is because Banco BPI is part of the same resolution group as its parent under the plans approved by the Single Resolution Board (SRB) and also because Banco BPI has been placing its junior debt buffers with its parent.
RATING SENSITIVITIES
IDR, SUPPORT RATING, SENIOR PREFERRED DEBT, AND DEPOSIT RATINGS
Factors that could, individually or collectively, lead to negative rating action/downgrade:
Banco BPI's IDRs, senior preferred debt, deposit ratings and SR would be downgraded if the IDRs of CaixaBank are downgraded.
Banco BPI's IDRs and SR are also sensitive to a weakening of CaixaBank's propensity to support the Portuguese subsidiary, for example, if Portugal becomes a less strategic market for the group or if Banco BPI becomes significantly less integrated within the group, which we do not expect.
Banco BPI's senior preferred debt and deposit ratings are also sensitive to a downgrade of Portugal's rating (BBB/Stable) as they are capped at one notch above the sovereign rating, driven by our assessment of country risks.
Factors that could, individually or collectively, lead to positive rating action/upgrade:
Banco BPI's IDRs and SR would be upgraded if the IDRs of CaixaBank are upgraded. They would also likely be upgraded if Fitch concludes that Banco BPI has become more strategically important to CaixaBank.
Banco BPI's senior preferred debt and deposit ratings could be upgraded if both CaixaBank's IDRs and Portugal's ratings are upgraded.
Best/Worst Case Rating Scenario
International scale credit ratings of Financial Institutions and Covered Bond issuers have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of three notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of four notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are based on historical performance. For more information about the methodology used to determine sector-specific best- and worst-case scenario credit ratings, visit https://www.fitchratings.com/site/re/10111579
REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING
The principal sources of information used in the analysis are described in the Applicable Criteria.
Public Ratings with Credit Linkage to other ratings
The IDR, Support Rating, senior preferred debt and deposit ratings of Banco BPI are linked to the Long-Term IDR of CaixaBank.
ESG Considerations
Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of '3'. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. For more information on Fitch's ESG Relevance Scores, visit www.fitchratings.com/esg
RATING ACTIONSENTITY/DEBT RATING PRIOR
Banco BPI S.A. LT IDR BBB Affirmed BBB
ST IDR F2 Affirmed F2
Support 2 Affirmed 2
long-term deposits
LT BBB+ Affirmed BBB+
Senior preferred
LT BBB+ Affirmed BBB+
short-term deposits
ST F2 Affirmed F2
Senior preferred
ST F2 Affirmed F2
VIEW ADDITIONAL RATING DETAILS
Additional information is available on www.fitchratings.com
BANCO BPI 
