Moody’s lowered the long-term issuer ratings and the ratings for senior unsecured debt of Bank Vontobel, as well as the long-term issuer ratings of its parent company Vontobel Holding, to A3 from A2. The outlook for these ratings was revised to stable from negative, according to a report published on Monday.

The rating for Vontobel Holding’s non-cumulative preferred shares was also lowered to Baa3 from Baa2. The bank’s long-term and short-term deposit ratings of Aa3/P-1 as well as its long-term and short-term Counterparty Risk Ratings (CRR) of A2/P-1 were affirmed. The outlook for the long-term deposit ratings was changed from «developing» to «stable.»

The Baseline Credit Assessment (BCA) and Adjusted BCA of Bank Vontobel were also downgraded to A3 from A2, while its long-term and short-term Counterparty Risk Assessment (CR Assessment) of A1(cr)/P-1(cr) were affirmed.

Limited Success in Asset Management

The downgrade of the BCA reflects the «limited measurable success» of Vontobel Holding’s efforts to revive its asset management business. This has negatively impacted the group’s franchise and the bank’s strong integration within the group. Moody’s said this led it to view the risk profile of the group’s businesses outside Bank Vontobel’s asset management segment as a key factor in the bank’s creditworthiness.

The BCA also takes into account the bank’s and group’s solid capital buffers, low risks from the lending business, strong liquidity reserves, and successful track record in wealth management and structured products issuance.

Due to the group’s business model, asset and funding risks mainly stem from operational, reputational, and market risks, as well as from a funding profile dominated by uninsured retail deposits.

The stable outlook on the issuer ratings reflects the view that Bank Vontobel’s credit profile remains firmly anchored at the BCA level of A3.