MOODY'S INVESTORS SERVICE CONFIRMS THE C BANK FINANCIAL STRENGTH RATING OF BANCO BRADESCO S.A. AND PUTS THE E+ BANK FINANCIAL STRENGTH RATING OF BANCO BOAVISTA-INTERATLANTICO S.A. ON POSITIVE OUTLOOK
Moody's Investors Service confirmed the C bank financial strength rating of Banco Bradesco S.A. (Bradesco) and put the E+ bank financial strength rating of Banco Boavista Inter-Atlantico S.A. (Boavista) on positive outlook. These actions followed today's announcement that Banco Bradesco has entered into a preliminary agreement to acquire a majority stake in Boavista in an all stock transaction.
The B3 long- term foreign currency- deposit ratings, the Not Prime short- term foreign currency- deposit ratings, and the B2 senior unsecured bond ratings, which are at the sovereign ceiling for both banks, were all affirmed.
The transaction is still subject to regulatory approval, and it is also subject to a due diligence that will be carried out by Bradesco.
Moody's also said that the confirmation of Bradesco's C bank financial strength rating is primarily based on the minimal integration risk that is associated with the acquisition; Boavista's size is comparatively small compared with the acquiring bank's, for example. In addition, Moody's believes that the acquisition should provide ample opportunity in terms of cost- cutting for Bradesco and will further enhance the bank's retail presence. Bradesco already has the largest retail private franchise in Brazil, and the bank benefits from a diversified geographical and product mix, the rating agency added.
Boavista Inter-Atlantico is the result of the acquisition of retail Banco Boavista by wholesale Inter-Atlantico in the third quarter of 1997. Boavista's present shareholding structure is 40% in the hands of the Portuguese group, Espirito Santo, 40% with the French conglomerate Credit Agricole, and 20% with the Brazilian Monteiro Aranha group. Since the 1997 acquisition, strong commitment by the shareholders, taking the form of hefty capital injections totaling approximately $1 billion, has led to very aggressive provisioning, heavy write- offs, and a much improved loan portfolio.
Banco Bradesco, S.A., headquartered in Sao Paolo, Brazil, had total assets of $44.9 billion at year-end 1999.
Banco Boavista Inter-Atlantico, S.A., headquartered in Sao Paolo, Brazil, held total assets of approximately US$3.3 billion at year-end 1999.
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