Ratings are assigned following 6 June 2018 update to Moody's Banks rating methodology
New York, June 21, 2018 -- Moody's Investors Service has today assigned Counterparty Risk Ratings
(CRRs) to 32 banks in Chile, Colombia, Paraguay, Peru,
Central America and the Dominican Republic, and four of their foreign
branches. At the same time, Moody's assigned a Counterparty
Risk Assessment (CRA) to Corporación Financiera de Desarrollo S.A.
(COFIDE) and to Banco de Desarrollo de El Salvador (Bandesal).
In addition, Moody's affirmed Bandesal and COFIDE's
issuer ratings. In addition, the long and short-term
CRAs of Banco Bilbao Vizcaya Argentaria Paraguay S.A. were
upgraded to Baa3(cr) and P-3(cr), from Ba1(cr) and not prime(cr)
respectively.
Moody's Counterparty Risk Ratings (CRR) are opinions of the ability
of entities to honor the uncollateralized portion of non-debt counterparty
financial liabilities (CRR liabilities) and also reflect the expected
financial losses in the event such liabilities are not honored.
CRR liabilities typically relate to transactions with unrelated parties.
Examples of CRR liabilities include the uncollateralized portion of payables
arising from derivatives transactions and the uncollateralized portion
of liabilities under sale and repurchase agreements. CRRs are not
applicable to funding commitments or other obligations associated with
covered bonds, letters of credit, guarantees, servicer
and trustee obligations, and other similar obligations that arise
from a bank performing its essential operating functions.
RATINGS RATIONALE
Moody's said that the CRRs assigned to the aforementioned banks are in
line with their CRAs.
Moody's does not considers any of the host countries of banks affected
by this rating action to be jurisdictions with operational resolution
regimes. Consequently, in assigning CRRs to these banks,
the rating agency starts with the banks' adjusted Baseline Credit Assessment
(BCA) and uses the agency's existing basic Loss-Given-Failure
(LGF) approach, which provides one notch of uplift from the banks'
adjusted BCAs to reflect the lower probability of default of CRR liabilities.
In Moody's view, secured counterparties to banks typically benefit
from greater protections under insolvency laws and bank resolution regimes
than do senior unsecured creditors, and this benefit is likely to
extend to the unsecured portion of such secured transactions in most bank
resolution regimes. Moody's believes that in many cases regulators
will use their discretion to allow a bank in resolution to continue to
honor its CRR liabilities or to transfer those liabilities to another
party who will honor them, in part because of the greater complexity
of bailing in obligations that fluctuate with market prices, and
also because the regulator will typically seek to preserve much of the
bank's operations as a going concern in order to maximize the value
of the bank in resolution, stabilize the bank quickly, and
avoid contagion within the banking system.
The CRAs and CRRs then incorporate governmental support, which can
result in additional uplift depending on the government's rating
together with Moody's assessment of the respective government´s
willingness to provide support to the bank in question. As a result,
two-thirds of the assigned CRAs and CRRs are one notch above their
corresponding senior unsecured debt, local currency deposit,
and/or issuer ratings. All of the remaining CRAs and CRRs are aligned
with their corresponding debt, local currency deposit, or
issuer ratings. This is because CRAs and CRRs for these issuers
receive less uplift from government support than their debt and deposit
ratings due to their higher starting points. Banco Agrícola,
S.A.'s CRA and CRR are constrained by El Salvador's
B1 foreign currency bond ceiling.
Moody's has assigned only foreign currency CRRs to banks in Panama
and El Salvador given both countries are fully dollarized.
The affirmation of Bandesal and COFIDE´s issuer rating follows Moody´s
decision to rate the banks using its Banks Methodology to assess both
the bank´s standalone credit fundamentals as well as government
support. Previously, Moody's used its Government-Related
Issuers Methodology to assess government support for these issuers.
The change in methodology does not have any impact on the banks'
issuer ratings.
As Bandesal's standalone BCA is already in line with the government
bond rating, neither its issuer rating nor its CRA or CRR receive
any ratings uplift from government support. Moody´s assesses
a low probability that the Government of El Salvador will support Bandesal,
of which it is the sole owner, considering the constraints on the
government´s ability to support the country´s banks given
the full dollarization of the economy.
For COFIDE, Moody's assesses a very high probability of government
support given its government ownership -- the government support
is also proven by the capitalization of multilaterals borrowings,
the reinvestment of dividends, and a comfort letter issued earlier
last year, in which Peru's National Government was committing
to acquire up to 20% of COFIDE's CAF shares to support the entity's
capitalization. This results in 6 notches of uplift to its Baa3
issuer ratings from its adjusted BCA of b3.
The following ratings were assigned to banks in Chile and their respective
offshore branches:
Banco de Chile
Local currency and foreign currency long-term Counterparty
Risk Ratings of Aa3
Local currency and foreign currency short-term Counterparty
Risk Ratings of Prime-1
Banco de Crédito e Inversiones
Local currency and foreign currency long-term Counterparty
Risk Ratings of A1
Local currency and foreign currency short-term Counterparty
Risk Ratings of Prime-1
Banco de Crédito e Inversiones (Miami Branch)
Local currency and foreign currency long-term Counterparty
Risk Ratings of A1
Local currency and foreign currency short-term Counterparty
Risk Ratings of Prime-1
Banco del Estado de Chile
Local currency and foreign currency long-term Counterparty
Risk Ratings of Aa3
Local currency and foreign currency short-term Counterparty
Risk Ratings of Prime-1
Banco Estado, New York Branch
Local currency and foreign currency long-term Counterparty
Risk Ratings of Aa3
Local currency and foreign currency short-term Counterparty
Risk Ratings of Prime-1
Banco Santander-Chile
Local currency and foreign currency long-term Counterparty
Risk Ratings of Aa3
Local currency and foreign currency short-term Counterparty
Risk Ratings of Prime-1
BBVA (Chile)
Local currency and foreign currency long-term Counterparty
Risk Ratings of A2
Local currency and foreign currency short-term Counterparty
Risk Ratings of Prime-2
Coopeuch - Cooperativa de Ahorro y Crédito
Local currency and foreign currency long-term Counterparty
Risk Ratings of Baa1
Local currency and foreign currency short-term Counterparty
Risk Ratings of Prime-2
Itaú CorpBanca
Local currency and foreign currency long-term Counterparty
Risk Ratings of A2
Local currency and foreign currency short-term Counterparty
Risk Ratings of Prime-1
The following ratings were assigned to banks in Colombia:
Banco Davivienda S.A.
Local currency and foreign currency long-term Counterparty
Risk Ratings of Baa2
Local currency and foreign currency short-term Counterparty
Risk Ratings of Prime-2
Banco de Bogotá S.A.
Local currency and foreign currency long-term Counterparty
Risk Ratings of Baa1
Local currency and foreign currency short-term Counterparty
Risk Ratings of Prime-2
Banco GNB Sudameris S.A.
Local currency and foreign currency long-term Counterparty
Risk Ratings of Ba1
Local currency and foreign currency short-term Counterparty
Risk Ratings of Not Prime
Bancolombia S.A.
Local currency and foreign currency long-term Counterparty
Risk Ratings of Baa1
Local currency and foreign currency short-term Counterparty
Risk Ratings of Prime-2
BBVA Colombia S.A.
Local currency and foreign currency long-term Counterparty
Risk Ratings of Baa1
Local currency and foreign currency short-term Counterparty
Risk Ratings of Prime-2
The following ratings were assigned to banks in Costa Rica:
Banco de Costa Rica
Local currency and foreign currency long-term Counterparty
Risk Ratings of Ba2
Local currency and foreign currency short-term Counterparty
Risk Ratings of Not Prime
Banco Nacional de Costa Rica
Local currency and foreign currency long-term Counterparty
Risk Ratings of Ba1
Local currency and foreign currency short-term Counterparty
Risk Ratings of Not Prime
The following ratings were assigned to banks in Dominican Republic:
Banco de Reservas de la República Dominicana
Local currency and foreign currency long-term Counterparty
Risk Ratings of Ba3
Local currency and foreign currency short-term Counterparty
Risk Ratings of Not Prime
The following ratings and assessments were assigned to banks in El Salvador:
Banco Agrícola, S.A.
Foreign currency long-term Counterparty Risk Rating of
B1
Foreign currency short-term Counterparty Risk Rating of
Not Prime
Banco de Desarrollo de El Salvador
Foreign currency long-term Counterparty Risk Rating of
B2
Foreign currency short-term Counterparty Risk Rating of
Not Prime
Long-term Counterparty Risk Assessment of B2(cr)
Short-term Counterparty Risk Assessment of Not Prime(cr)
The following ratings for banks in El Salvador were affirmed
Banco de Desarrollo de El Salvador
Long-term foreign currency issuer rating of B3, stable
The following ratings were assigned to banks in Guatemala:
Banco de los Trabajadores
Local currency and foreign currency long-term Counterparty
Risk Ratings of B2
Local currency and foreign currency short-term Counterparty
Risk Ratings of Not Prime
Banco Industrial S.A.
Local currency and foreign currency long-term Counterparty
Risk Ratings of Ba1
Local currency and foreign currency short-term Counterparty
Risk Ratings of Not Prime
The following ratings were assigned to banks in Panama:
BAC International Bank, Inc
Foreign currency long-term Counterparty Risk Rating of
Baa2
Foreign currency short-term Counterparty Risk Rating of
Prime-2
Banco General, S.A.
Foreign currency long-term Counterparty Risk Rating of
Baa1
Foreign currency short-term Counterparty Risk Rating of
Prime-2
Banco Internacional de Costa Rica, S.A.
Foreign currency long-term Counterparty Risk Rating of
Ba3
Foreign currency short-term Counterparty Risk Rating of
Not Prime
Banco Latinoamericano de Comercio Exterior
Foreign currency long-term Counterparty Risk Rating of
Baa1
Foreign currency short-term Counterparty Risk Rating of
Prime-2
Global Bank Corporation and Subsidiaries
Foreign currency long-term Counterparty Risk Rating of
Baa3
Foreign currency short-term Counterparty Risk Rating of
Prime-3
The following ratings were assigned to banks in Paraguay:
Banco Basa S.A.
Local currency and foreign currency long-term Counterparty
Risk Ratings of Ba2
Local currency and foreign currency short-term Counterparty
Risk Ratings of Not Prime
Banco Bilbao Vizcaya Argentaria Paraguay S.A.
Local currency and foreign currency long-term Counterparty
Risk Ratings of Baa3
Local currency and foreign currency short-term Counterparty
Risk Ratings of Prime-3
Banco Continental S.A.E.C.A.
Local currency and foreign currency long-term Counterparty
Risk Ratings of Ba1
Local currency and foreign currency short-term Counterparty
Risk Ratings of Not Prime
Banco Regional S.A.E.C.A
Local currency and foreign currency long-term Counterparty
Risk Ratings of Ba1
Local currency and foreign currency short-term Counterparty
Risk Ratings of Not Prime
The following assessments of banks in Paraguay were upgraded:
Banco Bilbao Vizcaya Argentaria Paraguay
Long-term counterparty risk assessment to Baa3 (cr),
from Ba1(cr)
Short-term counterparty risk assessment to P-3(cr),
from Not Prime(cr)
The following ratings were assigned to banks in Peru and their respective
offshore branches:
Banco de Crédito del Peru
Local currency and foreign currency long-term Counterparty
Risk Ratings of A3
Local currency and foreign currency short-term Counterparty
Risk Ratings of Prime-2
Banco de Crédito del Peru, Panama Branch
Foreign currency long-term Counterparty Risk Ratings of
A3
Foreign currency short-term Counterparty Risk Ratings of
Prime-2
Banco Internacional del Peru -- Interbank
Local currency and foreign currency long-term Counterparty
Risk Ratings of Baa1
Local currency and foreign currency short-term Counterparty
Risk Ratings of Prime-2
Banco Internacional del Peru (Panama Branch)
Foreign currency long-term Counterparty Risk Ratings of
Baa1
Foreign currency short-term Counterparty Risk Ratings of
Prime-2
Corporación Financiera de Desarrollo S.A.
Local currency and foreign currency long-term Counterparty
Risk Ratings of Baa2
Local currency and foreign currency short-term Counterparty
Risk Ratings of Prime-2
Long term Counterparty Risk Assessment of Baa2(cr)
Short term Counterparty Risk Assessment of Prime-2(cr)
Scotiabank Peru
Local currency and foreign currency long-term Counterparty
Risk Ratings of A3
Local currency and foreign currency short-term Counterparty
Risk Ratings of Prime-2
The following ratings for banks in Peru were affirmed
Corporación Financiera de Desarrollo S.A.
Local Currency and foreign currency long-term issuer rating
of Baa3, negative
What Could Change the Rating Up/Down
Chilean Banks
The CRRs of Banco de Chile, Banco Santander-Chile,
Banco del Estado de Chile, and Banco de Crédito e Inversiones
could be upgraded if the sovereign rating were to be upgraded; however,
there is limited upward rating pressure at present given the negative
outlook on the sovereign rating. The CRR of Itaú CorpBanca
could be upgraded if the bank's capitalization improves.
An upgrade of BBVA (Chile)'s CRR would be prompted by a combination
of improvements in its capitalization and profitability, and an
upgrade of the adjusted BCA of its current parent, Banco Bilbao
Vizcaya Argentaria, S.A. (BBVA Spain, Deposits:
A2 stable, Senior Unsecured: A3 stable, BCA: baa2).
Following the completion of the bank's pending sale to Bank of Nova
Scotia (Deposits: A1 negative, BCA: a3), however,
an improvement in the bank's financial fundamentals will be sufficient
to prompt an upgrade of the CRR. Coopeuch -- Cooperativa de
Ahorro y Crédito's CRR could be upgraded if it is able to
execute its five-year expansion plan without a major deterioration
in its capitalization, asset quality or profitability.
The CRRs of Banco de Chile, Banco Santander-Chile,
Banco del Estado de Chile, and Banco de Crédito e Inversiones
could be downgraded if the Chilean sovereign rating is downgraded,
in line with its negative outlook. The CRRs of Banco de Chile and
Banco Santander-Chile, as well as BBVA (Chile) and Coopeuch
-- Cooperativa de Ahorro y Crédito, could also be downgraded
as a result of a substantial deterioration in asset quality, earnings
generation, and capitalization. The CRR of Itaú CorpBanca
could be downgraded if the bank's profitability weakens or asset
risk increases, or if its dependence on wholesale funding does not
decrease.
Colombian Banks
The CRRs of Bancolombia S.A., Banco de Bogotá
S.A., and BBVA Colombia S.A. could be
upgraded if the sovereign rating were to be upgraded; however,
there is limited upward rating pressure at present given the negative
outlook on the sovereign rating. The CRR of Banco Davivienda S.A.
could be upgraded if the sovereign rating were to be upgraded together
coupled with an improvement in the bank's financial fundamentals.
Upward pressure on Banco GNB Sudameris S.A.'s CRR
could arise from a substantial improvement in capitalization, a
significant and sustainable increase in core earnings, and/or an
improvement in the bank's funding structure.
The CRRs of Bancolombia S.A. and Banco de Bogotá
S.A. could be downgraded if the Colombia sovereign rating
is downgraded, in line with its negative outlook if their asset
quality continues to deteriorate, or their capital ratios weaken.
The CRR of Banco Davivienda S.A. could be downgraded if
asset risk and profitability continue to deteriorate and/or the bank is
unable to sustain capitalization at current levels. The CRR of
BBVA Colombia S.A. could be downgraded if its liquidity
position, capitalization, or profitability weaken or if the
standalone BCA of its parent, BBVA Spain, were to be downgraded.
Banco GNB Sudameris S.A.'s CRR could be downgraded
if the bank's reliance on wholesale funding increases and/or its liquidity
position deteriorates.
Central American banks
The CRRs of Global Bank Corporation and Subsidiaries (Global Bank),
BAC International Bank, Inc (BAC), Banco Latinoamericano de
Comercio Exterior (Bladex), Banco de los Trabajadores (Bantrab)
and Banco Internacional de Costa Rica, S.A. (BICSA)
would be upgraded if their financial fundamentals improve. The
CRRs of Banco Industrial S.A. (Banco Industrial),
Bandesal, Banco de Costa Rica (BCR), Banco Nacional de Costa
Rica (BNCR), Banco General, S.A. (Banco General),
Banco Agrícola and Banco de Reservas de la Republica Dominicana
(Banreservas) could be upgraded if the respective sovereigns of Guatemala,
El Salvador, Costa Rica, Panama and the Dominican Republic
are upgraded.
The CRRs of Global Bank, BAC, Bladex, Bantrab and BICSA
would be downgraded if their asset quality, profitability,
and/or capital levels deteriorate. The CRRs of Banco Industrial,
Bandesal, BCR, BNCR, Banreservas and Banco Agrícola,
S.A. (Banco Agricola) would be downgraded following a downgrade
in the respective sovereign ratings. Banco General's CRR
would be lowered if either its financial fundamentals deteriorte,
or if Panama's sovereign rating is downgraded, though this
is unlikely at present given the positive outlook on the government's
rating.
Paraguayan Banks
Paraguayan banks' CRR's could face positive pressure as a result
of improved profitability and asset quality, as well as increased
portfolio diversification. Negative pressure on CRRs could result
from persistent deterioration in asset quality or a decline in profitability.
Additionally, a downgrade of Paraguay's ratings and deposit ceilings
would lead to lower CRRs at Banco Continental S.A.E.C.A.,
Banco Regional S.A.E.C.A. and Banco
Basa S.A.. Banco Bilbao Vizcaya Argentaria Paraguay
S.A.'s CRR could also face upward or downward pressure
if the ratings of its support provider, BBVA Spain were to be upgraded
or downgraded.
Peruvian Banks
Peruvian banks' CRR's could face positive pressure if their asset
risk and capitalization improve. Negative pressure on CRRs could
result from persistent deterioration in asset quality, profitability,
and/or capital. Additionally, a downgrade of Peru's sovereign
ratings would lead to lower CRRs.
The principal methodology used in these ratings was Banks published in
June 2018. Please see the Rating Methodologies page on www.moodys.com
for a copy of this methodology.
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 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 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 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.
Regulatory disclosures contained in this press release apply to the credit
rating and, if applicable, the related rating outlook or rating
review.
The below contact information is provided for information purposes only.
Please see 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
the ratings.
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.
Felipe Carvallo
VP - Senior Credit Officer
Financial Institutions Group
Moody's de Mexico S.A. de C.V
Ave. Paseo de las Palmas
No. 405 - 502
Col. Lomas de Chapultepec
Mexico, DF 11000
Mexico
JOURNALISTS: 1 888 779 5833
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
Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653
