Mexico, November 24, 2020 -- Moody's de Mexico, ("Moody's") has today affirmed the Ba1/Not Prime
long- and short-term local and foreign currency deposit
ratings of Barclays Bank Mexico, S.A. (Barclays Mexico)
and the Ba1/Not Prime long- and short -term issuer ratings
of Barclays Capital Casa de Bolsa, S.A. de C.V.
(Barclays Capital Mexico), following the affirmation of its ba2
Baseline Credit Assessment (BCA). The outlook on the ratings is
stable. The rating action is in line with the affirmation,
with a stable outlook, of Barclays Bank PLC.'s ratings (Barclays
Bank, A1/A1 stable; baa3), which is the Mexican subsidiaries'
parent company. (see https://www.moodys.com/research/--PR_436235).
The following ratings and assessments were affirmed:
Barclays Bank Mexico, S.A. (815083902):
Baseline credit assessment of ba2
Adjusted baseline credit assessment of ba1
Long-term global local currency deposit rating of Ba1, stable
outlook
Long-term global foreign currency deposit rating of Ba1,
stable outlook
Long-term Mexican National Scale deposit rating of A1.mx
Short-term Mexican National Scale deposit rating of MX-1
Long- and short-term Counterparty Risk Assessments of Baa3(cr)
and Prime-3(cr)
Short-term global local currency deposit rating of Not Prime
Short-term global foreign currency deposit rating of Not Prime
Outlook, stable
Barclays Capital Casa de Bolsa, S.A. de C.V.
(821609714):
Long-term global local currency issuer rating of Ba1, stable
outlook
Long-term Mexican National Scale local currency issuer rating of
A1.mx
Short-term Mexican National Scale local currency issuer rating
of MX-1
Short-term global local currency issuer rating of Not Prime
Outlook, stable
RATINGS RATIONALE
Moody's affirmation of the ratings and assessments of Barclays Mexico,
and its sister company Barclays Capital Mexico, follows a similar
action taken on the ratings of their parent, Barclays Bank,
and captures the bank's very strong core capitalization and its low asset
risk profile, which offset the volatile nature of its earnings.
The bank's Moody's adjusted capital ratio, tangible common
equity to adjusted risk weighted assets, stood at a high 17.5%
as of September 2020, after the bank experienced a sharp increase
in its investments and derivatives exposures in the first three months
of the year. The bank's derivatives portfolio grew significantly
during 2020 as the coronavirus-driven volatility in capital and
currencies markets led to higher hedging contracts with Barclays Mexico's
clients. However, a significant portion of the bank's risks
are transferred to other companies within the Barclays group, resulting
in limited risk exposure at the Mexican operation. As a wholesale
bank, Barclays is market funding and its liquidity is very high,
with average liquidity coverage ratio above 550% in the third quarter
of 2020.
Barclays México's BCA is constrained by the bank's niche wholesale
and investment banking operations, with a narrow focus on the rates
business, including derivative operations, foreign exchange
trading and bond underwriting. This generates inherently volatile
earnings that are more vulnerable than those of traditional retail and
commercial banking. As of September 2020, net income to tangible
assets was 0.7%, slightly decreasing from the 0.8%
posted as of year-end 2019, but profitability will likely
remain above the 0.5% historical levels as long as market
uncertainties and hence volatility persists. Barclays Mexico's
operating expenses were equivalent to almost half of the net revenues
in 2020.
The Mexican subsidiaries' deposit and issuer ratings benefit from
affiliate support, as indicated by one notch of uplift from its
BCA, which reflects Moody's assessment of a high likelihood of parental
support from Barclays Bank. Finally, as a highly integrated
and harmonized entity, Barclays Capital Mexico's ratings are in
line with those of Barclays Mexico, reflecting the strong linkages
between the two in terms of infrastructure, risk management practices
and customer base.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Barclays Mexico's ratings may face upward pressure if the bank manages
to stabilize its earnings stream, while its capitalization and asset
quality remain strong. Barclays Mexico's ratings could be downgraded
in case of a significant deterioration in its earnings, capitalization
or liquidity metrics.
The long-term Mexican National Scale ratings of A1.mx indicate
issuers or issues with above-average creditworthiness relative
to other domestic issuers. The short- term Mexican National
Scale ratings of issuers rated MX-1 indicate the strongest ability
to repay short-term senior unsecured debt obligations relative
to other domestic issuers.
The principal methodology used in rating Barclays Bank Mexico, S.A.
was Banks Methodology published in November 2019 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1147865.
The principal methodology used in rating Barclays Capital Casa de Bolsa,
S.A. de C.V. was Securities Industry Market
Makers Methodology published in November 2019 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1187332.
Alternatively, please see the Rating Methodologies page on www.moodys.com.mx
for a copy of these methodologies.
The period of time covered in the financial information used to determine
Barclays Bank Mexico, S.A.'s rating is between 01/01/2016
and 30/09/2020 (source: Audited Financial statements 2016-2019.
Quarterly financials 2020).
The period of time covered in the financial information used to determine
Barclays Capital Casa de Bolsa, S.A. de C.V.'s
rating is between 01/01/2016 and 30/09/2020 (source: Audited Financial
statements 2016-2019. Quarterly financials 2020).
Moody's National Scale Credit 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 credit 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 ".za"
for South Africa. For further information on Moody's approach to
national scale credit ratings, please refer to Moody's Credit rating
Methodology published in May 2016 entitled "Mapping National Scale Ratings
from Global Scale Ratings". While NSRs have no inherent absolute
meaning in terms of default risk or expected loss, a historical
probability of default consistent with a given NSR can be inferred from
the GSR to which it maps back at that particular point in time.
For information on the historical default rates associated with different
global scale rating categories over different investment horizons,
please see https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1216309.
REGULATORY DISCLOSURES
For further specification of Moody's key rating assumptions and
sensitivity analysis, see the sections Methodology Assumptions and
Sensitivity to Assumptions in the disclosure form. Moody's
Rating Symbols and Definitions can be found at: https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_79004.
Information sources used to prepare the rating are the following:
parties involved in the ratings, parties not involved in the ratings,
public information, and confidential and proprietary Moody's
information.
The ratings have been disclosed to the rated entities prior to public
dissemination.
A general listing of the sources of information used in the rating process,
and the structure and voting process for the rating committees responsible
for the assignment and monitoring of ratings can be found in the Disclosure
tab in www.moodys.com.mx.
The date of the last Credit Rating Action for Barclays Bank Mexico,
S.A. was 5/4/2018
The date of the last Credit Rating Action for Barclays Capital Casa de
Bolsa, S.A. de C.V. was 5/4/2018
For ratings issued on a program, series, category/class of
debt or security this announcement provides certain regulatory disclosures
in relation to each rating of a subsequently issued bond or note of the
same series, category/class of debt, security 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 credit rating action on the
support provider and in relation to each particular credit rating action
for securities that derive their credit ratings from the support provider's
credit rating. For further information please see the ratings tab
on the issuer/entity page for the respective issuer on www.moodys.com.mx.
For any affected securities or rated entities receiving direct credit
support from the primary entity(ies) of this credit rating action,
and whose ratings may change as a result of this credit 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.
This credit rating is subject to upgrade or downgrade based on future
changes in the financial condition of the Issuer/Security, and said
modifications will be made without Moody's de México S.A.
de C.V accepting any liability as a result.
Regulatory disclosures contained in this press release apply to the credit
rating and, if applicable, the related rating outlook or rating
review.
Moody's general principles for assessing environmental, social
and governance (ESG) risks in our credit analysis can be found at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1133569.
Moody's considers the quality of information available on the rated entity,
obligation or credit satisfactory for the purposes of issuing a rating.
Moody's adopts all necessary measures so that the information it uses
in assigning a rating 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 Moody's Rating Symbols and Definitions on www.moodys.com.mx
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.mx
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 our website www.moodys.com.mx for further
information.
Please see www.moodys.com.mx for any updates on changes
to the lead rating analyst and to the Moody's legal entity that has issued
the rating.
The ratings issued by Moody's de Mexico are opinions regarding the credit
quality of securities and/or their issuers and not a recommendation to
invest in any such security and/or issuer.
Please see the ratings tab on the issuer/entity page on www.moodys.com.mx
for additional regulatory disclosures for each credit rating.
Rodrigo Marimon Bernales
Analyst
Financial Institutions Group
JOURNALISTS: 1 800 666 3506
Client Service: 1 212 553 1653
M. Celina Vansetti-Hutchins
MD - Banking
Financial Institutions Group
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653
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