New York, March 12, 2012 -- The following release represents Moody's Investors Service's summary
credit opinion on Banco Mercantil del Norte, S.A.
(Banorte) and includes certain regulatory disclosures regarding its ratings.
This release does not constitute any change in Moody's ratings or rating
rationale for Banco Mercantil del Norte, S.A. (Banorte)
and its affiliates.
Moody's current ratings on Banco Mercantil del Norte, S.A.
(Banorte) and its affiliates are:
Long Term Bank Deposits (domestic currency) ratings of A3
Long Term Bank Deposits (foreign currency) ratings of Baa1
Bank Financial Strength rating of C-
Subordinate (domestic currency) ratings of Baa1/Baa2
Subordinate (foreign currency) ratings of Baa1/Ba1
Subordinate MTN Program (domestic currency) ratings of (P)Baa1/(P)Baa2
Short Term Bank Deposits (domestic and foreign currency) ratings of P-2
NSR Long Term Bank Deposits (domestic currency) ratings of Aaa.mx
NSR Subordinate (domestic currency) ratings of Aaa.mx/Aa1.mx
NSR Subordinate MTN Program (domestic currency) ratings of Aaa.mx
NSR Short Term Bank Deposits (domestic currency) ratings of MX-1
Banco Mercantil del Norte, S.A. (Cayman Islands)
Senior Unsecured (foreign currency) ratings of A3
Casa de Bolsa Banorte, S.A. de C.V.
(CB Banorte)
Long Term Issuer (domestic currency) rating of A3
Short Term Issuer (domestic currency) rating of P-2
NSR Long Term Issuer (domestic currency) rating of Aaa.mx
NSR Short Term Issuer (domestic currency) rating of MX-1
Arrendadora y Factor Banorte, S.A. de C.V.
(AyF Banorte)
Long Term Issuer (domestic currency) rating of A3
Short Term Issuer (domestic currency) rating of P-2
NSR Long Term Issuer (domestic currency) rating of Aaa.mx
NSR Short Term Issuer (domestic currency) rating of MX-1
RATINGS RATIONALE
Moody's assigns a bank financial strength rating (BFSR) of C- (C
minus), with stable outlook, to Banco Mercantil del Norte,
S.A. (Banorte), which translates into an unsupported
baseline credit assessment (BCA) of Baa2. This rating is based
on the bank's expanding national franchise, its growing deposit
base, and its position within the three largest banks in Mexico
- as indicated by its 10.4% market share of deposits.
Other rating considerations include the bank's good financial performance
overtime, particularly in terms of recurrent profitability.
An important balancing factor, however, is the bank's
credit exposure to large single borrowers relative to both its Tier 1
capital and core earnings, which we continue to identify as a source
of concern. Credit concentration levels remain high relative to
similarly rated banks and could add volatility to the banks' earnings.
Underpinning the BCA is the consistency in asset quality indicators,
as suggested by a delinquency ratio of 2.5% as of 30 September
2011. This performance reflects management's efforts to contain
deterioration in its loan portfolio as well as Banorte's more diversified
loan mix, including a larger exposure to sub-sovereign risks
(Mexican states and municipalities).
Moody's assigns a long term global local currency (GLC) deposit rating
of A3 to Banorte, reflecting its unsupported BCA of Baa2 as well
as Moody's assessment of Mexico as a high-support country.
Banorte's significant role in the Mexican banking system supports Moody's
assessment of a very high probability of systemic support for the bank
in case of systemic stress. Moreover, in Moody's view,
Banorte could likely receive extraordinary systemic support because of
its position as a large, indigenous bank. The above mentioned
assessment of systemic support leads to an uplift from the BCA of two
notches, leading to the GLC deposit rating of A3.
Banorte's long term foreign currency deposit rating of Baa1 is constrained
by Mexico's foreign currency deposit ceiling of Baa1.
Ratings on Banorte's affiliate companies: Moody's also assigns
A3 long term and Prime-2 short term GLC issuer ratings to Casa
de Bolsa Banorte, S.A. de C.V. (CB Banorte)
and Arrendadora y Factor Banorte, S.A. de C.V.
(AyF Banorte). CB Banorte's ratings reflect the broker's close
links and integration with Banorte and as part of the same financial group,
Grupo Financiero Banorte (GF Banorte). Banorte and CB Banorte are
also highly integrated, sharing a common infrastructure, brand
and funding, as well as staff and risk management practices.
To be sure, CB Banorte's market share and its business potential
would be fairly limited, if not for the revenue and cost synergies
it derives from being part of the GF Banorte. AyF Banorte's
ratings are based on the strategic importance of this company to GF Banorte.
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 Implementation Guidance
published in March 2011 entitled "Mapping Moody's National Scale
Ratings to Global Scale Ratings."
Rating Outlook
All ratings have a stable outlook.
What Could Change the Rating - Up
Moody's sees little upside potential over the medium term for Banorte's
C- bank financial strength rating.
That said, however, the BFSR could be pressured upwards by
sustainable core earnings and further strengthening of the bank's Tier
1 capital base over the medium term.
What Could Change the Rating - Down
Downward pressure on the BFSR could result from further deterioration
of the bank's asset quality that could materially impair earnings and
then capital.
The methodologies used in these ratings were Bank Financial Strength Ratings:
Global Methodology published in February 2007 and Incorporation of Joint
Default Analysis into Moody's Bank Ratings: A Refined Methodology
published in March 2007. Please see the Credit Policy page on www.moodys.com
for a copy of these methodologies.
The Local Market analyst for Banco Mercantil del Norte, S.A.
and Banco Mercantil del Norte, S.A. (Cayman Islands)
is David Olivares Villagomez, 52-55-1253-5705.
REGULATORY DISCLOSURES
Although these credit ratings have been issued in a non-EU country
which has not been recognized as endorsable at this date, the credit
ratings are deemed "EU qualified by extension" and may still
be used by financial institutions for regulatory purposes until 30 April
2012. Further information on the EU endorsement status and on the
Moody's office that has issued a particular Credit Rating is available
on www.moodys.com.
For ratings issued on a program, series or category/class of debt,
this announcement provides relevant 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 relevant 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 relevant 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.
Information sources used to prepare each of the ratings are the following
: parties involved in the ratings, parties not involved in
the ratings, public information, and confidential and proprietary
Moody's Investors Service information.
Moody's considers the quality of information available on the rated
entities, obligation or credit satisfactory for the purposes of
issuing these ratings.
Moody's adopts all necessary measures so that the information it
uses in assigning the ratings is of sufficient quality and from sources
Moody's considers to be reliable including, when appropriate,
independent third-party sources. However, Moody's
is not an auditor and cannot in every instance independently verify or
validate information received in the rating process.
Please see the ratings disclosure page on www.moodys.com
for general disclosure on potential conflicts of interests.
Please see the ratings disclosure page on www.moodys.com
for information on (A) MCO's major shareholders (above 5%)
and for (B) further information regarding certain affiliations that may
exist between directors of MCO and rated entities as well as (C) the names
of entities that hold ratings from MIS that have also publicly reported
to the SEC an ownership interest in MCO of more than 5%.
A member of the board of directors of this rated entity may also be a
member of the board of directors of a shareholder of Moody's Corporation;
however, Moody's has not independently verified this matter.
Please see Moody's Rating Symbols and Definitions on the Rating
Process page on www.moodys.com for further information on
the meaning of each rating category and the definition of default and
recovery.
Please see ratings tab on the issuer/entity page on www.moodys.com
for the last rating action and the rating history. The date on
which some ratings were first released goes back to a time before Moody's
ratings were fully digitized and accurate data may not be available.
Consequently, Moody's provides a date that it believes is
the most reliable and accurate based on the information that is available
to it. Please see the ratings disclosure page on our website www.moodys.com
for further information.
In addition to the information provided below please find on the ratings
tab of the issuer page at www.moodys.com, for each
of the ratings covered, Moody's disclosures on the lead rating
analyst and the Moody's legal entity that has issued each of the
ratings.
Jeanne Del Casino
VP - Senior Credit Officer
Financial Institutions Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
M. Celina Vansetti
MD - Banking
Financial Institutions Group
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Moody's Disclosures on Credit Ratings of Banco Mercantil del Norte, S.A. (Banorte)
