Rating Action: Moody’s places Exane’s Baa2 long-term issuer rating on review for upgradeGlobal Credit Research – 19 Mar 2021Paris, March 19, 2021 — Moody’s Investors Service (“Moody’s”) today placed the Baa2 long-term issuer ratings of Exane S.A. (Exane) on review for upgrade. The review for upgrade reflects the recent announcement by its 50% shareholder BNP Paribas (BNPP, long-term deposits and senior unsecured Aa3 stable, Baseline Credit Assessment baa1) of its intention to acquire up to 100% of Exane and integrate its cash equity and derivatives services into its Global Equity operations. As a result, the rating agency expects a higher likelihood of affiliate support from BNPP to Exane, in case of need, once the transaction has been completed.Moody’s also placed on review for upgrade the Baa2 backed long-term issuer rating of Exane Derivatives SNC.A full list of affected ratings can be found at the bottom of this press release.RATINGS RATIONALE / FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGSMoody’s maintained its assessment of Exane’ standalone strength at Ba1 and the review for upgrade on Exane’s Baa2 issuer ratings reflects the higher likelihood of support from BNPP once the acquisition has been completed. However, Exane will continue to exist as a legal entity until the full integration of Exane into BNPP’s Global Market division, if it takes place, and thus the relevance of its standalone creditworthiness will diminish progressively, which may justify an alignment with BNPP’s baa1 Baseline Credit Assessment.On 11 March, BNPP announced its intention to acquire up to 100% of Exane [1], from the 50% stake it has been holding in this joint-venture for the past 17 years. The considered acquisition would strengthen the cash equity and derivatives services BNP Paribas can offer its clients and fit well with the ongoing migration of Deutsche Bank’s Global Prime Finance and Electronic Equities business to BNPP, following a 2019 transaction between the two banks. The combined operations dovetails with BNPP’s objective to become the largest Prime Broker in Europe and a top four player globally.Moody’s includes within Exane’s Baa2 long-term issuer ratings two notches of uplift reflecting high potential affiliate support from BNPP. This reflects, on the one hand, the close commercial ties between the two entities, allowing Exane to conduct certain activities under BNPP’s brand, the provision of the EUR1.25 billion committed credit facility and some additional budget from BNP to support Exane’s research capacity in recent years; and on the other hand, BNPP’s limited ownership and Exane’s operational autonomy. The completion of the announced transaction would limit Exane’s operational autonomy and increase its level of integration within BNPP’s equity business, thereby increasing the probability of affiliate support, even if Exane’s operations will remain legally separated from its parent until the completion of the transfer of activities.A downgrade is unlikely given the current review for upgrade. However Exane’s ratings could be downgraded in case of (1) a weakening in the creditworthiness of BNPP, leading to reduced affiliate support; (2) reduced commercial and financial integration with BNPP, suggesting a lower probability of support; (3) sustained weakening in Exane’s profitability and/or franchise without rebound post restructuring; or (4) an increase in its risk appetite and/or leverage.Exane’s Baa2 long-term rating could be upgraded in case of (1) a greater degree of commercial and financial integration with BNPP achieved following the intended acquisition; (2) markedly stronger funding and liquidity; and/or (3) a structural shift to activities that generate higher and more stable profitability. An upgrade of BNPP’s baa1 standalone Baseline Credit Assessment could also result in greater affiliate support, which could in turn lead to an upgrade of Exane’s Baa2 long-term issuer rating.Conversely Exane’s Baa2 long-term ratings could be affirmed if the transaction is not achieved or does not lead to a higher degree of commercial and financial integration of Exane’s operations into BNPP.Exane Derivatives SNCThe Baa2 backed long-term issuer rating of Exane Derivatives SNC are also placed on review for upgrade reflecting a credit substitution approach. This is based upon the strong legal protection for creditors provided by Exane Derivatives SNC’s partnership-like status (Société en Nom Collectif). This legal status renders Exane jointly and severally liable with Exane Derivatives SNC for its own liabilities.LIST OF AFFECTED RATINGS..Issuer: Exane S.A.On Review for Possible Upgrade:….Long-term Issuer Ratings, Placed on Review for Upgrade, currently Baa2Outlook Action:….Outlook, Changed To Ratings Under Review From Stable..Issuer: Exane Derivatives SNCOn Review for Possible Upgrade:….Backed Long-term Issuer Rating, Placed on Review for Upgrade, currently Baa2Outlook Action:….Outlook, Changed To Ratings Under Review From StablePRINCPAL METHODOLOGYThe principal methodology used in these ratings was Securities Industry Market Makers Methodology published in November 2019 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1187332. Alternatively, please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.REGULATORY DISCLOSURESFor further specification of Moody’s key rating assumptions and sensitivity analysis, see the sections Methodology Assumptions and Sensitivity to Assumptions in the disclosure form. Moody’s Rating Symbols and Definitions can be found at: https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_79004.For ratings issued on a program, series, category/class of debt or security this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series, category/class of debt, security 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 credit rating action on the support provider and in relation to each particular credit 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 credit rating action, and whose ratings may change as a result of this credit 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 ratings have been disclosed to the rated entity or its designated agent(s) and issued with no amendment resulting from that disclosure.These ratings are solicited. Please refer to Moody’s Policy for Designating and Assigning Unsolicited Credit Ratings available on its website www.moodys.com.Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.Moody’s general principles for assessing environmental, social and governance (ESG) risks in our credit analysis can be found at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1243406.The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody’s affiliates outside the UK and is endorsed by Moody’s Investors Service Limited, One Canada Square, Canary Wharf, London E14 5FA under the law applicable to credit rating agencies in the UK. Further information on the UK endorsement status and on the Moody’s office that issued the credit rating is available on www.moodys.com.REFERENCES/CITATIONS[1] “BNP Paribas is looking to acquire up to 100% of Exane”, www.Exane.com. 11-Mar-2021Please 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. 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