Wells Fargo Securities Europe S.A. -- Moody's assigns first-time issuer ratings of A2/Prime-1 to Wells Fargo Securities Europe

Rating Action: Moody's assigns first-time issuer ratings of A2/Prime-1 to Wells Fargo Securities Europe

Global Credit Research - 09 Jul 2020

New York, July 09, 2020 -- Moody's Investors Service has assigned a first-time A2 long-term issuer rating and a short-term Prime-1 issuer rating to Wells Fargo Securities Europe S.A. (WFSE), a Paris-based indirect broker-dealer subsidiary of Wells Fargo & Company (Wells Fargo; A2 stable). WFSE's rating outlook is stable, matching the stable outlook on Wells Fargo.

Assigned:

..Issuer: Wells Fargo Securities Europe S.A.

....LT Issuer Rating (Local Currency), Assigned A2, Stable

....ST Issuer Rating (Local Currency), Assigned P-1

Outlook Actions:

..Issuer: Wells Fargo Securities Europe S.A.

....Outlook, Assigned Stable

RATINGS RATIONALE

WFSE's A2/Prime-1 issuer ratings are based on Moody's view that the company is a highly integrated and harmonized indirect subsidiary of Wells Fargo & Company.

WFSE was created in 2018 and commenced operations in late-2019. Based in Paris and regulated by French authorities, WFSE serves European clients of Wells Fargo that had been previously served by Wells Fargo Securities International Limited (WFSIL; A2 stable), a London-based broker-dealer. However, following the exit of the Government of United Kingdom (Aa2 negative) from the European Union (Aaa stable), WFSIL will lose its passporting rights, which currently provides it with the ability to serve clients based in the European Union.

WFSE's capital and long-term funding are sourced from within the Wells Fargo group, and its systems, support functions, employees and management are also provided by Wells Fargo. WFSE essentially acts as the continental European affiliate of Wells Fargo Securities.

Given WFSE's high level of integration with Wells Fargo, Moody's expects that in the event WFSE needed financial support, its parent would be willing and able to provide it. WFSE accounts for less than 0.01% of Wells Fargo's total assets and the group does not expect it to grow significantly in the next several years.

WFSE's assigned A2 long-term issuer rating matches the a2 standalone baseline credit assessment of Wells Fargo Bank, N.A., which is the group's primary operating banking subsidiary. Moody's does not include any uplift in the ratings for WFSE from Wells Fargo's group's advanced Loss Given Failure (LGF) analysis because it does not expect WFSE to be included in the resolution perimeter of Wells Fargo, which is a US-based entity. As such, WFSE's ratings are likely to continue to match the standalone BCA of Wells Fargo Bank, N.A.

FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS

As a highly integrated and harmonized indirect subsidiary of Wells Fargo, WFSE's ratings are linked to the standalone BCA of Wells Fargo Bank N.A.

An upgrade of WFSE's ratings would likely follow an upgrade of Wells Fargo Bank N.A.'s BCA, which in turn can occur if the group reports significantly stronger profitability metrics, a continued healthy balance sheet and the successful resolution of all legacy issues.

A downgrade of WFSE's ratings would likely follow a downgrade of Wells Fargo Bank N.A.'s BCA, which in turn can occur if management in unable to correct the bank's governance and risk management deficiencies. In addition, any noticeable franchise erosion, such as a loss of deposits, or an outsized spike in nonperforming assets, could also lead to a lower BCA.

The methodologies used in these ratings were Banks Methodology published in November 2019 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1147865, and 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 these methodologies.

REGULATORY DISCLOSURES

For 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_1133569.

The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody's affiliates outside the EU and is endorsed by Moody's Deutschland GmbH, An der Welle 5, Frankfurt am Main 60322, Germany, in accordance with Art.4 paragraph 3 of the Regulation (EC) No 1060/2009 on Credit Rating Agencies. Further information on the EU endorsement status and on the Moody's office that issued the credit rating is available on www.moodys.com.

Please 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.

Allen Tischler Senior Vice President Financial Institutions Group Moody's Investors Service, Inc. 250 Greenwich Street New York, NY 10007 U.S.A. JOURNALISTS: 1 212 553 0376 Client Service: 1 212 553 1653 M. Celina Vansetti-Hutchins MD - Banking Financial Institutions Group JOURNALISTS: 1 212 553 0376 Client Service: 1 212 553 1653 Releasing Office: Moody's Investors Service, Inc. 250 Greenwich Street New York, NY 10007 U.S.A. JOURNALISTS: 1 212 553 0376 Client Service: 1 212 553 1653

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