FINANCIAL INSTITUTIONS

CREDIT OPINION7 October 2019

Update

RATINGS

Landesbank Baden-WuerttembergDomicile Germany

Long Term CRR Aa3

Type LT Counterparty RiskRating - Fgn Curr

Outlook Not Assigned

Long Term Debt Aa3

Type Senior Unsecured -Dom Curr

Outlook Stable

Long Term Deposit Aa3

Type LT Bank Deposits - FgnCurr

Outlook Stable

Please see the ratings section at the end of this reportfor more information. The ratings and outlook shownreflect information as of the publication date.

Contacts

Andrea Wehmeier +49.69.70730.782VP-Senior Analystandrea.wehmeier@moodys.com

Alexander Hendricks,CFA

+49.69.70730.779

Associate Managing Directoralexander.hendricks@moodys.com

Landesbank Baden-WuerttembergUpdate following rating affirmation

SummaryOn 20 August 2019, we affirmed Landesbank Baden-Wuerttemberg's (LBBW) Aa3 (stable)/P-1 deposit and senior unsecured ratings. We also affirmed the bank's A2 junior seniorunsecured debt ratings, its Aa3/P-1 Counterparty Risk Ratings (CRRs), as well as its baa2Baseline Credit Assessment (BCA) and baa1 Adjusted BCA.

LBBW's senior ratings reflect (1) the bank's baa2 BCA; (2) its baa1 Adjusted BCA,incorporating one notch of rating uplift because of affiliate support from Sparkassen-Finanzgruppe (S-Group, Aa2 stable, a2)1; (3) the result of our Advanced Loss Given Failure(LGF) analysis, which provides three notches of rating uplift for the bank's senior unsecureddebt; and (4) our assumption of moderate support from the Government of Germany (Aaastable2), resulting in one notch of rating uplift.

The baa2 BCA reflects LBBW's strong asset-quality metrics and its solid capitalisation, aswell as its highly liquid balance sheet. The assigned BCA further takes account LBBW’s low,yet relatively stable, profitability metrics and its meaningful dependence on confidence-sensitive wholesale funding, which exposes the bank to refinancing risks in a more adversemarket environment, despite some mitigation because of LBBW's access to sector funds.The inherent concentration risks of LBBW’s significant exposures to highly cyclical sectorslike commercial real estate (CRE) and the automotive industry imply challenges for LBBW inmaintaining its sound asset quality and below-average loan-loss charges.

Exhibit 1

Rating Scorecard - Key financial ratios

1.0%16.1% 0.2% 50.4% 45.5%

0%

10%

20%

30%

40%

50%

60%

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

Asset Risk:Problem Loans/

Gross Loans

Capital:Tangible Common

Equity/Risk-WeightedAssets

Profitability:Net Income/

Tangible Assets

Funding Structure: MarketFunds/ Tangible

Banking Assets

Liquid Resources: LiquidBanking Assets/Tangible

Banking Assets

Solvency Factors (LHS) Liquidity Factors (RHS)

LBBW (BCA: baa2) Median baa2-rated banks

So

lve

ncy F

acto

rs

Liq

uid

ity F

acto

rs

Note: all ratios as of year-end 2018Source: Moody's Financial Metrics

MOODY'S INVESTORS SERVICE FINANCIAL INSTITUTIONS

Credit strengths

» Strong capitalisation, which provides a substantial buffer for investors

» Low problem loan ratio, which reflects a benign economic environment and the bank's limited risk appetite

» Generally sound liquid resources and liquidity management

Credit challenges

» Risk concentrations in cyclical sectors, such as CRE and the automotive industry

» Low and strained profitability and efficiency metrics

» Dependence on a significant confidence-sensitive capital market funding, which is only partly mitigated by the bank's access tosector funds

OutlookThe outlook is stable, reflecting our expectation of a stable financial profile and unchanged sector relationships, as well as the bank'sunchanged significant bail-in-able instruments ranking lower in resolution.

Factors that could lead to an upgrade

» An upgrade of LBBW's senior unsecured debt and deposit ratings would be subject to an upgrade of its BCA, because these ratingsalready benefit from the highest possible rating uplift from our Advanced LGF analysis.

» Upward pressure on LBBW's BCA could be triggered by a sustainable shift of the bank’s activities to very strong banking systems,in combination with a meaningful and sustained reduction in the bank’s reliance on capital market-sensitive funding or a materialincrease in liquid resources, or if the bank diversifies its lending book such that it significantly reduces existing high sectorconcentration risks.

Factors that could lead to a downgrade

» A downgrade of LBBW's ratings could result from a multi-notch downgrade of its BCA; developments within the S-Finanzgruppethat would trigger a reduction in our sector support assumptions; if the volume of subordinated or other debt instruments that aredesigned to be loss absorbing in resolution decreases substantially and beyond our expectations, compared with the bank’s tangiblebanking assets.

» Downward pressure on LBBW's BCA could result from a significant deterioration in its overall credit profile, especially if caused bysignificantly higher-than-expected loan-loss charges or an unexpected and sustained weakening in the bank’s capital adequacymetrics.

This publication does not announce a credit rating action. For any credit ratings referenced in this publication, please see the ratings tab on the issuer/entity page onwww.moodys.com for the most updated credit rating action information and rating history.

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Key indicators

Exhibit 2

Landesbank Baden-Wuerttemberg (Consolidated Financials) [1]12-182 12-172 12-162 12-152 12-142 CAGR/Avg.3

Total Assets (EUR Billion) 225.1 219.2 228.3 218.0 244.6 (2.1)4

Total Assets (USD Billion) 257.4 263.2 240.7 236.8 296.0 (3.4)4

Tangible Common Equity (EUR Billion) 12.9 12.8 12.5 12.7 12.6 0.64

Tangible Common Equity (USD Billion) 14.8 15.3 13.2 13.8 15.2 (0.8)4

Problem Loans / Gross Loans (%) 0.8 0.9 1.2 1.8 2.4 1.45

Tangible Common Equity / Risk Weighted Assets (%) 16.1 16.9 16.2 17.0 15.3 16.36

Problem Loans / (Tangible Common Equity + Loan Loss Reserve) (%) 6.2 7.4 10.3 14.4 19.0 11.55

Net Interest Margin (%) 0.7 0.7 0.7 0.7 0.7 0.75

PPI / Average RWA (%) 0.9 1.0 0.9 0.8 0.6 0.86

Net Income / Tangible Assets (%) 0.2 0.2 0.2 0.2 0.2 0.25

Cost / Income Ratio (%) 72.9 73.3 74.4 77.3 80.4 75.75

Market Funds / Tangible Banking Assets (%) 50.4 50.5 56.5 58.6 60.3 55.35

Liquid Banking Assets / Tangible Banking Assets (%) 45.5 45.3 42.0 40.5 44.4 43.65

Gross Loans / Due to Customers (%) 138.8 143.7 168.0 188.8 178.9 163.65

[1]All figures and ratios are adjusted using Moody's standard adjustments. [2]Basel III - fully-loaded or transitional phase-in; IFRS. [3]May include rounding differences due to scaleof reported amounts. [4]Compound Annual Growth Rate (%) based on time period presented for the latest accounting regime. [5]Simple average of periods presented for the latestaccounting regime. [6]Simple average of Basel III periods presented.Source: Moody's Investors Service; Company Filings

ProfileLBBW is a German universal bank. The bank provides retail and commercial banking, leasing, factoring, asset management, real estate,and equity and project finance services, either directly or through its subsidiaries. The LBBW Group comprises LBBW and the regionalclient bank Baden-Württembergische Bank. As of half-year 2019, the bank reported consolidated assets of €265.1 billion and employed9.908 employees.

LBBW also offers key German and international account management, capital market and real estate finance services, and acts as thecentral bank for savings banks in Baden-Württemberg, Rhineland-Palatinate and Saxony3.

Weighted Macro Profile of Strong (+)LBBW is predominantly active in Germany, which has an assigned Very Strong- Macro Profile. LBBW's Strong+ Macro Profile alsocaptures gradually increasing exposures to international corporate and CRE-lending activities in countries with weaker Macro Profilesthan Germany, as part of its revived growth strategy. An improvement in the bank's Macro Profile may strengthen its financial profile,all other things being equal.

Detailed credit considerationsVery solid asset risk profile, despite concentrations in higher-risk sectorsWe assign a baa1 Asset Risk score to LBBW, five notches below the initial score4. of aa2. The score reflects the strong asset quality ofLBBW's loan book, and the bank's exposure to more cyclical industries such as the automotive and CRE industries. It also incorporatesthe bank's dependence on its capital market business.

LBBW’s strong asset quality was represented by a problem loan ratio of 0.7% as of half-year 2019, which has been trending downfor years. Strong economic growth in Germany, the successful finalisation of LBBW’s de-risking after the financial crisis and a morecautious risk approach contributed to lowering of problem loans to €858 million as of half-year 2019 from €4.7 billion in 2012.

However, the bank's risk concentrations to cyclical industries within its corporate loan and CRE book remain high and leave thebank susceptible to weaker GDP growth and potential structural shifts in the economy, especially with regards to automotive. Adeterioration in GDP growth and a structural shift for the automotive sector are underway, we do expect real GDP growth for Germanyto drop to 0.6% for 2019 and 1% in 2020 and identified multiple challenges for automakers.

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The bank's net exposure to the higher risk CRE sector and automotive industry accounted for €7.8 billion and €12.6 billion, respectively,as of half-year 2019, compared with an overall net exposure of €206.5 billion as of half-year 2019.

Exhibit 3

LBBW's problem loans have gradually declinedCoverage ratios have meanwhile strengthened

0%

25%

50%

75%

100%

125%

0.0%

0.2%

0.4%

0.6%

0.8%

1.0%

1.2%

1.4%

1.6%

1.8%

2.0%

2015 2016 2017 2018 2019 H1

Problem Loans / Gross Loans Coverage ratio (right axis)

Problem loan ratio in accordance with Moody's definition. Coverage ratio = Loan-loss reserves/problem loans.Sources: Company reports, Moody's Investors Service

Apart from its role as the central bank for the regional savings banks (for example, money market and hedging activities), we takeaccount of the bank's relatively high proportion of market risk in its overall risk exposures, despite its declining share of revenuegenerated from trading activities.

LBBW's strong capital ratios start to declineOur assigned a1 Capital score for LBBW is two notches below the aa2 initial score and reflects our expectation regarding the potentialnegative impact of the upcoming regulatory changes; and the expected increase in the bank's risk-weighted assets, driven by businessgrowth in the medium term.

Going forward, lending growth related to LBBW's medium term strategy, as well as the implementation of upcoming regulatorychanges may lead to a downwards trend from its presently strong capital ratios, given the bank's yet limited capital generationcapacity. The bank's tangible common equity did fall to around 16.1% in 2018, from 16.9% in 2017. The decline was driven by the effectof the implementation of IFRS 9, as well as lending growth.

As of half-year, LBBW's reported fully loaded Common Equity Tier 1 (CET1) capital ratio stood at 14.6%, down from 15.1% as ofyear-end 2018. Moreover, the bank's total capital remained stable at 21.9%. However, the bank's regulatory capital ratios are stillsignificantly above the required total regulatory ratio of 13.25% (Tier 1: 11.25% and CET1: 9.75% for 2019), which the regulatordetermined following the supervisory review and evaluation process. The bank's regulatory leverage ratio stood at 4.3% as of half-year2019, slightly down from 4.7% as of year-end 2018.

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Exhibit 4

LBBW's capitalisation remains consistently strongExhibit 5

LBBW's regulatory total capital requirements have increased

16.19%16.86%

16.08%15.50% 15.80%15.10%

5.49% 5.82% 5.74%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

18.0%

2016 2017 2018

TCE ratio CET1 ratio (transitional) TCE leverage ratio

TCE = Tangible common equity (Moody's calculation); CET1 = Common Equity Tier 1.Sources: Company reports, Moody's Investors Service

11.59%12.30%

13.25%

0%

2%

4%

6%

8%

10%

12%

14%

2017 2018 2019F

Pillar 1 - CET1 Pillar 1 - Tier 1 Pillar 1 - Tier 2

Pillar 2 Capital conservation buffer Countercyclical buffer

O-SII buffer

Source: Company reports

Profitability and efficiency metrics are under strainWe assign the bank a b1 Profitability score, in line with the initial score, based on our expectation that for the next two to three years,the group's earnings will remain low compared with its overall risk profile and, therefore, modest by global standards.

Our assessment reflects our expectation of continued pressure on LBBW’s already low risk-adjusted profitability, thereby limitingits capital generation capacity. While LBBW displays a generally sound history of low credit losses, a weakening macroeconomicdevelopment, as well as the structural challenges facing the automotive industry, challenges LBBW's ability to maintain below-averageloan-loss charges. This, together with continued strain on earnings resulting from the low interest-rate environment as well as risinginvestments into digital banking services and infrastructure, is likely to strain the bank's profitability despite efforts to control costs.

For the half-year 2019, LBBW reported a pretax profit of €319 million, up from €282 million the year before. A stronger net interestincome of €811 million (up from €796 million), higher FCC of €279 million (H1 2018: €262 million) were the key drivers to balance thehigher risk provisions of €63 million (H1 2018: €33 million) for now. Admin expenses were slightly lower at €864 million (from €878million), though the key driver for the slightly stronger profit was a one-off of €43 million related to securities sales.

In 2018, LBBW reported a pretax profit of €558 million, up from €515 million in 2017, mainly driven by lower operating expenses. Inparticular, LBBW's administrative expenses in 2018 were lower than the figures for 2017 (in 2018: €1,773 million and in 2017: €1,824million), in contrast to the previous upward trend in costs. In addition, LBBW's net interest income slightly declined to €1.5 billion in2018, from €1.6 billion in 2017. The sale of LBBW's guaranteed structured credit portfolio (Sealink) in 2017 has slightly enhanced thebank's earnings capacity because of the easing burden of related state-aid costs (2017: €61 million).

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Exhibit 6

Earnings are under pressureLower earnings from main income streams alongside slightly lower administrative costs

2,2441,773 1,878 1,654 1,669 1,587 1,527 1,622

514

545 518515 527 534 512 558

296 879 264 480 579 620 581 288

-2,098 -2,271 -2,139 -2,048 -2,065 -2,008 -1,911 -1,728

-130-90

-104

-3,000

-2,000

-1,000

0

1,000

2,000

3,000

4,000

2012 2013 2014 2015 2016 2017 2018 2019 H1

€ m

illio

n

Net interest Income Net fees and commissions income Trading & other income Admin. Expenses

Risk provisions Extraordinary income and expense Pre-tax profit

*2019 H1 figures extrapolated to full yearSources: Company reports, Moody's Financial Metrics

Funding profile supported by the bank's access to the savings banks sectorWe assign a ba3 Market Funding score to LBBW, which is three notches above the b3 initial score. The assigned score takes intoconsideration LBBW's good access to stable funding resources provided by regional savings banks (and their retail clients), as well asits own retail client base, its strong covered bond franchise and access to development bank loans. The Market Funding score furthertakes into account the bank's overall high dependence on wholesale funding for a part of its lending business, which exposes the bankto refinancing risks in a more adverse market environment.

Given some decline in LBBW’s market funding reliance, we expect the bank's funding needs to stabilise at around €10 billion-€11 billionper annum. Nevertheless, LBBW is not entirely immune to market shocks, given its large derivatives book, the related risk of volatilecollateralisation requirements and its sizeable deposits from institutional clients.

LBBW funded itself with €77.8 billion in deposits and €40.1 billion in due from banks as of half-year 2019. Confidence-sensitive fundingsources such as bonds and promissory notes stood at €24.8 billion, while more stable covered bonds provided a €17.1 billion share inthe funding mix.

Exhibit 7

LBBW's funding structure is significantly dependent on interbank lines and debt issuance

0%

10%

20%

30%

40%

50%

60%

70%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2012 2013 2014 2015 2016 2017 2018

Equity Other liabilities Trading liabilities Issued securities Interbank Deposits Market Funds Ratio* (right axis)

*Market funding ratio = Market funds/tangible banking assets.Sources: Company reports, Moody's Investors Service

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MOODY'S INVESTORS SERVICE FINANCIAL INSTITUTIONS

A highly liquid balance sheet is a strong mitigant for market funding risksWe assign an a1 Liquid Resources score to LBBW, one notch below the initial score of aa3. Our consideration of pledged liquid assetsfor cover bond pools, repos and development bank activities results in a one-notch downward adjustment to the bank's strong LiquidResources score, also taking into account additional liquid resources available.

Together with the bank's diversified funding mix, the bank's liquidity reserves constitute a very balanced profile, offering the banksignificant flexibility in a more adverse market environment. The bank's ample liquidity and good access to sector funds are its keycredit strengths that mitigate potential funding challenges, but also support the bank's growth strategy, as it provides sufficientflexibility to replace the current costly cash into higher yielding lending assets.

LBBW’s liquid resources comprised €16.8 billion in cash as of half-year 2019, €26.1 billion in due from banks and €23.3 billion in liquidsecurities. The bank's €26.9 billion in pass through-loans, its €2.8 billion in pledged liquid assets in its cover pool and its other cash orother liquid encumbered assets of around €9 billion (all as of year-end 2018) are considered in our analysis.

Exhibit 8

LBBW has ample access to liquidity from sector funds, liquid securities and cash resources

34%

36%

38%

40%

42%

44%

46%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2012 2013 2014 2015 2016 2017 2018

Other assets Loans Securities/Investments Interbank Cash Liquid Banking Asset Ratio (right axis)

* Liquid banking assets ratio = Liquid assets/tangible banking assets.Sources: Company reports, Moody's Investors Service

Moreover, additional liquidity could be generated through the issuance of covered bonds. As of year-end 2018, and based on anoutstanding issuance of €11.0 billion, the over-collateralisation of LBBW's mortgage cover pool stood at 48% on an unstressed presentvalue basis and at 75% for its public-sector cover pool, with €7.5 billion in outstanding liabilities. LBBW has, therefore, substantialleeway for using its existing cover pool to generate fresh liquidity through the issuance of covered bonds.

Environmental, social and governance considerationsEnvironmental risks can be defined as environmental hazards encompassing the impacts of air pollution, soil/water pollution, watershortages and natural and man-made hazards (physical risks). Additionally, regulatory or policy risks, like the impact of carbonregulation or other regulatory restrictions, including the related transition risks like policy, legal, technology and market shifts, thatcould impair the evaluation of assets are an important factor. In our Environmental risk heatmap, we scored 84 sectors according totheir overall exposure to environmental risks. In line with our general view for the banking sector, LBBW has an overall low exposure toEnvironmental risks, except for the bank's concentration to the automotive industry as a sector with an 'Elevated risk - Emerging'. Suchan evaluation goes in line with a clear exposure to environmental risk that could be material for credit evaluations over the mediumterm (the next 3-5 years). The related risks for the bank's loan portfolio have been incorporated in the assigned Asset Risk score, asone of the key drivers for our significant downwards adjustment from the initial score. For further information, please refer to ourEnvironmental risk heatmaps.

Social risk considerations represent a broad spectrum, including customer relations, human capital, demographic and societal trends,health and safety and responsible production. The most relevant social risks for banks arise from the way they interact with theircustomers. Social risks are particularly high in the area of data security and customer privacy which is partly mitigated by sizeabletechnology investments and banks’ long track record of handling sensitive client data. Fines and reputational damage due to productmisselling or other types of misconduct is a further social risk. Societal trends are also relevant in a number of areas, such as shiftingcustomer preferences towards digital banking services increasing information technology cost, aging population concerns in several

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countries impacting demand for financial services or socially driven policy agendas that may translate into regulation that affectsbanks’ revenue base. Overall, we consider banks to face moderate social risks.

Corporate governance is a well-established key driver for banks and related risks are typically included in our evaluation of thebanks' financial profile. Further factors like specific corporate behaviour, key person risk, insider and related-party risk, strategy andmanagement risk factors and dividend policy may be captured in individual adjustments to the BCA. Governance is highly relevant forLBBW, as it is to all players in the banking industry. Corporate governance weaknesses can lead to a deterioration in a company’s creditquality, while governance strengths can benefit its credit profile. Governance risks are largely internal rather than externally driven, andfor LBBW we do not have any particular governance concern. Nonetheless, corporate governance remains a key credit considerationand requires ongoing monitoring.

Support and structural considerationsAffiliate supportLBBW benefits from cross-sector support from S-Group. Cross-sector support reduces the probability of default because the supportwould be available to stabilise a distressed member bank and not just to compensate for losses in resolution. The ownership structuresof the individual banks or banking groups determine the assigned level of support (either high or very high). Full S-Group ownership,combined with the membership in the cross-liability scheme, constitutes a very high level of support. The high support assumptionassigned to LBBW and also to most Landesbanks reflects their cross-liability scheme membership and only partial ownership byS-Group members. Cross-sector support, therefore, provides one notch of rating uplift to LBBW's debt, deposit and subordinatedinstrument ratings.

Loss Given Failure (LGF) analysisLBBW is subject to the EU Bank Recovery and Resolution Directive, which we consider an operational resolution regime. We, therefore,apply our Advanced LGF analysis, where we consider the risks faced by the different debt and deposit classes across the liabilitystructure should the bank enter resolution.

Our Advanced LGF analysis follows the revised insolvency legislation in Germany that became effective on 21 July 2018 and is nowconsistent with that of most other EU countries, where statutes do not provide full preference to deposits over senior unsecureddebt. In line with our standard assumptions, we assume that equity and asset losses stand at 3% and 8%, respectively, of tangiblebanking assets in a failure scenario. We also assume a 25% run-off in junior wholesale deposits and a 5% run-off in preferred deposits.Moreover, we assign a 25% probability to junior deposits being preferred to senior unsecured debt. We apply a standard assumption forEuropean banks that 26% of deposits are junior.

For LBBW, our LGF analysis indicates an extremely low loss given failure for deposits and for senior unsecured debt. Therefore, depositsand senior instruments benefit from three notches of rating uplift, while junior senior debt benefits from two notches of ratinguplift above the bank's baa1 Adjusted BCA. For LBBW, the two-notch uplift currently assigned is sensitive to the downside, given thesubordination and volume available for this liability class.

Furthermore, our LGF analysis continues to indicate a high loss given failure for subordinated debt classes, leading us to position theseinstruments one notch below the bank's baa1 Adjusted BCA.

Government support considerationsFollowing the introduction of the Bank Recovery and Resolution Directive, we have lowered our expectations about the degree ofsupport the government might provide to a bank in Germany in the event of need. Because of its size on a consolidated basis, weconsider S-Group to be systemically relevant. We, therefore, attribute a moderate probability of German government support for allmembers of the sector, in line with support assumptions for other systemically relevant banking groups in Europe. We, therefore, stillinclude one notch of government support uplift in our CRRs, senior unsecured debt and deposit ratings for S-Group member banks thatare incorporated in Germany, including LBBW. For junior debt, we continue to believe that the likelihood of government support is lowand these ratings do not include any related uplift. Subordinated debt instruments do not benefit from any government support.

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Counterparty Risk Ratings (CRRs)CRRs are opinions of the ability of entities to honour the uncollateralised portion of non-debt counterparty financial liabilities (CRRliabilities) and also reflect the expected financial losses in the event such liabilities are not honoured. CRRs are distinct from ratingsassigned to senior unsecured debt instruments and from issuer ratings because they reflect that, in a resolution, CRR liabilities mightbenefit from preferential treatment compared with senior unsecured debt. Examples of CRR liabilities include the uncollateralisedportion of payables arising from derivatives transactions and the uncollateralised portion of liabilities under sale and repurchaseagreements.

LBBW's CRRs are positioned at Aa3/P-1The CRRs, before government support, are positioned three notches above the bank's baa1 Adjusted BCA, reflecting the extremely lowloss given failure from the high volume of instruments that are subordinated to CRR liabilities.

LBBW's CRRs benefit from one notch of rating uplift based on government support, in line with our assumptions on deposits and seniorunsecured debt.

Counterparty Risk (CR) AssessmentCR Assessments are opinions of how counterparty obligations are likely to be treated if a bank fails and are distinct from debt anddeposit ratings in that they (1) consider only the risk of default rather than both the likelihood of default and the expected financialloss, and (2) apply to counterparty obligations and contractual commitments rather than debt or deposit instruments. The CRAssessment is an opinion of the counterparty risk related to a bank's covered bonds, contractual performance obligations (servicing),derivatives (for example, swaps), letters of credit, guarantees and liquidity facilities.

LBBW's CR Assessment is positioned at Aa3(cr)/Prime-1(cr)The CR Assessment, before government support, is positioned three notches above the Adjusted BCA of baa1, based on the bufferagainst default provided to the senior obligations represented by the CR Assessment by more subordinated instruments, includingjunior deposits and senior unsecured debt.

LBBW's CR Assessment benefits from one notch of rating uplift based on government support, in line with our support assumptions ondeposits and senior unsecured debt.

Methodology and scorecardThe principal methodology we used in rating LBBW was Banks, published in August 2018.

About Moody's Bank ScorecardOur Bank Scorecard is designed to capture, express and explain in summary form our Rating Committee's judgement. When readin conjunction with our research, a fulsome presentation of our judgement is expressed. As a result, the output of our scorecardmay materially differ from that suggested by raw data alone (though it has been calibrated to avoid the frequent need for strongdivergence). The scorecard output and the individual scores are discussed in rating committees and may be adjusted up or down toreflect conditions specific to each rated entity.

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Rating methodology and scorecard factors

Exhibit 9

Landesbank Baden-WuerttembergMacro FactorsWeighted Macro Profile Strong + 100%

Factor HistoricRatio

InitialScore

ExpectedTrend

Assigned Score Key driver #1 Key driver #2

SolvencyAsset RiskProblem Loans / Gross Loans 1.0% aa2 ←→ baa1 Sector concentration Market risk

CapitalTangible Common Equity / Risk Weighted Assets(Basel III - fully loaded)

16.1% aa2 ↓↓ a1 Risk-weightedcapitalisation

Expected trend

ProfitabilityNet Income / Tangible Assets 0.2% b1 ←→ b1 Return on assets Expected trend

Combined Solvency Score a2 baa1LiquidityFunding StructureMarket Funds / Tangible Banking Assets 50.4% b3 ↑↑ ba3 Extent of market

funding relianceMarket funding quality

Liquid ResourcesLiquid Banking Assets / Tangible Banking Assets 45.5% aa3 ↓ a1 Stock of liquid assets Quality of liquid assets

Combined Liquidity Score ba1 baa3Financial Profile baa2Qualitative Adjustments Adjustment

Business Diversification 0Opacity and Complexity 0Corporate Behavior 0

Total Qualitative Adjustments 0Sovereign or Affiliate constraint AaaScorecard Calculated BCA range baa1 - baa3Assigned BCA baa2Affiliate Support notching 1Adjusted BCA baa1

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De Jure waterfall De Facto waterfall NotchingDebt ClassInstrumentvolume +

subordination

Sub-ordination

Instrumentvolume +

subordination

Sub-ordination

De Jure De FactoLGF

NotchingGuidance

vs.Adjusted

BCA

AssignedLGF

notching

AdditionalNotching

PreliminaryRating

Assessment

Counterparty Risk Rating - - - - - - - 3 0 a1Counterparty Risk Assessment - - - - - - - 3 0 a1 (cr)Deposits - - - - - - - 3 0 a1Senior unsecured bank debt - - - - - - - 3 0 a1Junior senior unsecured bank debt - - - - - - - 2 0 a2Dated subordinated bank debt - - - - - - - -1 0 baa2

Instrument Class Loss GivenFailure notching

Additionalnotching

Preliminary RatingAssessment

GovernmentSupport notching

Local CurrencyRating

ForeignCurrency

RatingCounterparty Risk Rating 3 0 a1 1 Aa3 Aa3Counterparty Risk Assessment 3 0 a1 (cr) 1 Aa3(cr)Deposits 3 0 a1 1 Aa3 Aa3Senior unsecured bank debt 3 0 a1 1 Aa3Junior senior unsecured bank debt 2 0 a2 0 A2 A2Dated subordinated bank debt -1 0 baa2 0 Baa2 Baa2[1]Where dashes are shown for a particular factor (or sub-factor), the score is based on non-public information.Source: Moody’s Investors Service

Ratings

Exhibit 10Category Moody's RatingLANDESBANK BADEN-WUERTTEMBERG

Outlook StableCounterparty Risk Rating Aa3/P-1Bank Deposits Aa3/P-1Baseline Credit Assessment baa2Adjusted Baseline Credit Assessment baa1Counterparty Risk Assessment Aa3(cr)/P-1(cr)Issuer Rating Aa3Senior Unsecured -Dom Curr Aa3Junior Senior Unsecured A2Junior Senior Unsecured MTN -Dom Curr (P)A2Subordinate Baa2Commercial Paper -Dom Curr P-1Other Short Term -Dom Curr (P)P-1

Source: Moody's Investors Service

11 7 October 2019 Landesbank Baden-Wuerttemberg: Update following rating affirmation

MOODY'S INVESTORS SERVICE FINANCIAL INSTITUTIONS

Endnotes1 The ratings shown are S-Group's corporate family rating and outlook, as well as its BCA.

2 The rating shown is the German government's issuer rating and outlook.

3 For further details, please refer to LBBW's Company Profile and the German Banking System Profile.

4 The initial score is referred to as the Macro-Adjusted score in our Bank Scorecard

12 7 October 2019 Landesbank Baden-Wuerttemberg: Update following rating affirmation

MOODY'S INVESTORS SERVICE FINANCIAL INSTITUTIONS

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REPORT NUMBER 1183855

13 7 October 2019 Landesbank Baden-Wuerttemberg: Update following rating affirmation

MOODY'S INVESTORS SERVICE FINANCIAL INSTITUTIONS

Contacts

Gerson Morgenstern +49.69.70730.796Associate Analystgerson.morgenstern@moodys.com

Hannah Dimpker +49.69.70730.978Associate Analysthannah.dimpker@moodys.com

Andrea WehmeierVP-Senior Analystandrea.wehmeier@moodys.com

14 7 October 2019 Landesbank Baden-Wuerttemberg: Update following rating affirmation