Investing.com -- Fitch Ratings has placed Santander Bank Polska S.A.’s (SBP) Long-Term Issuer Default Rating (IDR) and Shareholder Support Rating (SSR) on Rating Watch Negative (RWN). This action is in response to Erste Group Bank AG (OTC: EBKDY )’s (Erste, A/Stable) announcement that it has agreed with Banco Santander SA (NYSE: SAN ) (A/Stable) to acquire a controlling 49% stake in SBP.

The RWN reflects the potential negative impact of this ownership change on the ability and inclination to provide support for SBP. The bank is expected to be fully consolidated into Erste’s group accounts. The transaction is likely to close in the fourth quarter of 2025, subject to regulatory approvals. Fitch Ratings will resolve the RWN upon completion of the transaction, which may take longer than six months.

SBP’s ’bbb’ Viability Rating, Short-Term IDR and Short-Term National Rating are unaffected by this rating action. The key rating drivers for SBP remain those outlined in Fitch’s Rating Action Commentary "Fitch Affirms Santander BP (NYSE: BP ) at ’BBB+’; Outlook Stable" published in July 2024.

The RWN reflects Fitch’s perspective that, should the acquisition be completed, Fitch will assess the support available to SBP from its new largest owner, Erste. This includes evaluating Erste’s ability to provide support considering the relatively large size of SBP, and its propensity to support the Polish bank based on its importance for the group and its central and eastern European franchise.

Fitch continues to assess support from Banco Santander (BME: SAN ) as very highly likely until the completion of the transaction, as a SBP default would be damaging to Banco Santander’s reputation.

Factors that could lead to a negative rating action or downgrade include a lower likelihood of support from the new parent upon completion of the transaction. SBP’s Long-Term IDR and SSR would be downgraded if Banco Santander’s Long-Term IDR are downgraded or if Fitch anticipates a weakening of Banco Santander’s inclination to support the Polish subsidiary.

On the other hand, factors that could lead to a positive rating action or upgrade include the transaction not proceeding, or a very high likelihood of support from the new parent.

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