S&P Global Ratings raises Saxo’s credit rating

S&P Global has raised its long-term issuer credit rating on Saxo Bank to A- from BBB.

Saxo Bank says this credit rating upgrade reflects its strengthened financial profile, including efforts to increase ‘resolvability and enhance its subordinated debt buffers in alignment with regulatory requirements for systemically important institutions’. 

Handing down Saxo’s upgrade, S&P Global says the outlook is stable with the rationale being Saxo’s resolution strategy is consistent with its position as a systemically important bank in Denmark.

S&P Global reports: “The Danish Financial Supervisory Authority’s (FSA’s) resolution plan envisages that Saxo will be subject to an open bank bail-in process in the unlikely event that it failed.

We view this as consistent with the Danish regulator’s routine use of resolution (as opposed to liquidation) to deal with distressed banks, its classification of Saxo as a systemic bank with an attendant extra capital buffer, and Saxo’s deposit-heavy liability profile, of which the deposit guarantee scheme covered about 42% at year-end 2023.

We expect this resolution strategy will likely support business continuity even if Saxo was subsequently restructured.”

Saxo Deputy CEO and COO Søren Kyhl says the stable outlook reflects the view that Saxo Bank will continue to maintain its solid operating profitability, robust capitalisation, and effective risk management.

“This rating upgrade by S&P Global Ratings serves as a testament to our unwavering commitment to financial resilience and prudent risk management.

We are pleased that our enhanced credit rating reflects our efforts to further bolster our financial robustness, which is in alignment with our designation as a Systemically Important Financial Institution (SIFI) last year.

This is paramount to our ability to provide our growing number of clients and partners with a secure and reliable trading and investment platform.”

At year-end 2023, Saxo reported total assets of about DKK89 billion (about €11.9 billion), with total client assets of about DKK745 billion. S&P Global anticipates earnings over the next 12 months will continue to support the bank’s capitalisation.

“We estimate Saxo’s risk-adjusted capital (RAC) ratio was 19.3% at year-end 2023,” the upgrade report says.

Founded some 30 years ago in Copenhagen, Saxo is a fintech specialist that operates a multi-asset trading and investment business for those investors keen to put their cash into equities.

Last week Saxo Australia CEO Adam Smith (above) spoke to Mining.com.au about the fintech’s “long heritage” and modern focus on providing market access to retail and institutional investors

Saxo competes with a number of investment brokers and trading platforms in Australia across various market segments. These range from well-known Australian bank-owned brokers such as CommSec and NAB Trade to more recent brokerage market entrants including Stake, MooMoo, eToro, Plus500, Tiger, and other advanced options like CMC Markets, IG, and Interactive Brokers.

Saxo is a wholly owned licensed subsidiary of the Copenhagen-based Saxo Bank, which holds more than US$100 billion in client assets, has over 1 million clients worldwide, and 30 years-plus of financial market experience.

Write to Adam Orlando at Mining.com.au

Images: Saxo
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Written By Adam Orlando
Mining.com.au Editor-in-Chief Adam Orlando has more than 20 years’ experience in the media having held senior roles at various publications, including as Asia-Pacific Sector Head (Mining) at global newswire Acuris (formerly Mergermarket). Orlando has worked in newsrooms around the world including Hong Kong, Singapore, London, and Sydney.