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Related Issuers
Rating Action:

Moody's assigns first time ratings to Banco de Corrientes S.A.

Global Credit Research - 06 May 2013

Buenos Aires City, May 06, 2013 -- Moody's Investors Service assigned first time ratings to Banco de Corrientes S.A., including a bank financial strength rating (BFSR) of E+ (plus), which maps to a b3 baseline credit assessment; long- and short-term global local-currency deposit ratings of B2 and Not Prime, respectively; and long- and short-term foreign-currency deposit ratings of Caa1 and Not Prime, the latter constrained by Moody's foreign-currency country ceiling for deposits in Argentina.

Moody's Latin America also assigned a A1.ar local currency deposit rating and a Ba1.ar foreign-currency deposit rating on the Argentine national scale.

The outlook on the bank's BFSR and local-currency deposit ratings is negative, in line with the negative outlook on Argentina's sovereign ratings, because of the high correlation between the bank's creditworthiness and the government's credit strength.

The following new ratings were assigned to Banco de Corrientes:

Bank Financial Strength Rating: E+, with negative outlook

Long- and short-term global local-currency deposits: B2 and Not Prime, with negative outlook

Long- and short-term foreign-currency deposits: Caa1 and Not Prime, with stable outlook

Long-term National Scale local-currency deposit rating: A1.ar, with negative outlook

Long-term National Scale foreign-currency deposit rating: Ba1.ar, with stable outlook

RATINGS RATIONALE

Moody's noted that the E+ BFSR and b3 baseline credit assessment (BCA) reflect Banco de Corrientes's relatively modest size and niche business strategy that is primarily focused on consumer lending within the Province of Corrientes (not rated by Moody's). As the financial and payroll agent for the provincial government of Corrientes, the bank has access to low-cost funding sources, including deposits from the Province, which account for over 30% of total deposits, and benefits from preferred access to the payroll and pension accounts of provincial civil servants. The bank's business is particularly centered on high-margined payroll-and pension deductible loans, as well as loans to small and medium-sized companies and corporations; these relationships offer important cross-selling opportunities that generate fees, including those received from the Province for its role as paying agent.

Moody's noted as key risk factors the bank's limited business and funding diversification with a focus on one regional market and dependent upon the financial performance of the Province. The standalone ratings are also constrained by Banco de Corrientes's high lending growth experienced over the last two years directed mainly towards unsecured consumer credit, which exposes its balance sheet to asset quality deterioration as the portfolio seasons. The bank is also subject to competition from larger local entities, despite its strong foothold in its province, as indicated by loan and deposit market shares of 41% and 49%, respectively.

The assigned ratings also reflect the risks related to Argentina's highly inflationary economy and pressured operating and regulatory environment. Banco de Corrientes's B2 global local-currency deposit rating is largely based on the E+ BFSR and b3 BCA, and receives one notch of uplift to B2 due to Moody's assessment of a high probability of systemic support that reflect its regional importance.

The principal methodology used in this rating was Moody's Consolidated Global Bank Rating Methodology published in June 2012. Please see the Credit Policy page on www.moodys.com for a copy of this methodology.

Moody's National Scale Ratings (NSRs) are intended as relative measures of creditworthiness among debt issues and issuers within a country, enabling market participants to better differentiate relative risks. NSRs differ from Moody's global scale ratings in that they are not globally comparable with the full universe of Moody's rated entities, but only with NSRs for other rated debt issues and issuers within the same country. NSRs are designated by a ".nn" country modifier signifying the relevant country, as in ".mx" for Mexico. For further information on Moody's approach to national scale ratings, please refer to Moody's Rating Methodology published in October 2012 entitled "Mapping Moody's National Scale Ratings to Global Scale Ratings".

REGULATORY DISCLOSURES

For ratings issued on a program, series or category/class of debt, this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt 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 rating action on the support provider and in relation to each particular 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 rating action, and whose ratings may change as a result of this 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.

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.

María Valeria Azconegui
Asst Vice President - Analyst
Financial Institutions Group
Moody's Latin America
Ing. Butty 240
16th Floor
Buenos Aires City C1001AFB
Argentina
JOURNALISTS: (800) 666 -3506
SUBSCRIBERS: (5411) 5129 2600

Maria Celina Vansetti-Hutchins
MD - Banking
Financial Institutions Group
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Releasing Office:
Moody's Latin America
Ing. Butty 240
16th Floor
Buenos Aires City C1001AFB
Argentina
JOURNALISTS: (800) 666 -3506
SUBSCRIBERS: (5411) 5129 2600

Moody's assigns first time ratings to Banco de Corrientes S.A.
No Related Data.

 

© 2013 Moody's Investors Service, Inc. and/or its licensors and affiliates (collectively, "MOODY'S"). All rights reserved.

 


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