NOTE: On October 11, 2012, the press release was revised as follows: The fifth paragraph was corrected to read "All the revised ratings carry a stable outlook, with the exception of Standard Bank Argentina's local currency deposit and debt ratings that remain on review for possible downgrade in light of its acquisition by China's ICBC pending regulatory approval.? Revised release follows.
Buenos Aires City, June 22, 2012 -- Moody's Investors Service has today downgraded the standalone bank
financial strength ratings or lowered the standalone credit assessments
of 31 financial institutions in Argentina by one to five notches.
These rating actions reflect the detrimental effects of Argentina's
macroeconomic, political and country risk environment on financial
institutions coupled with Moody's assessment of the high correlation
between their credit profiles and that of the sovereign.
Moody's also downgraded by one to three notches the global scale
local currency deposit ratings of 28 banks and six finance companies,
and the issuer ratings of one financial services holding company and one
commodities exchange. Moody's Latin America has also downgraded
the long term local and foreign currency debt ratings of 19 Argentinean
banks and finance companies.
At the same time Moody's downgraded, on its national scale
for Argentina, the local currency deposit and issuer ratings of
26 institutions and lowered the local and foreign currency debt ratings
of 13 and 7 institutions, respectively.
Short and long term foreign currency deposit ratings on both the global
and national scales were unaffected by this rating action; however
global scale foreign currency debt ratings of four institutions were affected.
All the revised ratings carry a stable outlook, with the exception of Standard Bank Argentina's local currency deposit and debt ratings that remain on review for possible downgrade in light of its acquisition by China's ICBC pending regulatory approval.
Today's rating actions conclude the reviews for possible downgrade
Moody's initiated on November 21, 2011, in light of
the potential adverse effects on Argentinean bank credit fundamentals
of a weakening economic outlook coupled with government measures and currency
controls. The rating actions also conclude the reviews continued
or initiated on March 16 and March 21, 2012 of financial institutions
with standalone credit assessments above the B3 rating of the Argentinean
government, as discussed in the rating implementation guidance "How
Sovereign Credit Quality May Affect Other Ratings" published 13
February 2012, and in the special comment "Banks and Sovereigns:
Risk Correlations Constrain Standalone Bank Credit Assessments,"
published 30 April 2012.
Moody's has also reassessed its assumptions about the probability
of government support for Argentinean banks, finance companies and
commodities exchange. As a result of this reassessment, the
systemic support indicator for Argentina has been lowered to B2 from B1,
which has contributed to the downgrade of the local currency ratings.
The ratings outcomes are also influenced by the recent lowering of Argentina's
local currency deposit and debt ceilings to Ba3 from Ba1 in light of increased
political and country risk. The new ceiling now caps the local
currency ratings of all financial institutions at Ba3.
Moody's standalone bank financial strength ratings and standalone
credit assessments for the rated Argentinean financial institutions now
range between E+ and E, from D+ and E+ previously,
and between ba3 and caa2, from ba1 and caa1 previously.
Local currency deposit and debt ratings now range between Ba3 and B3,
from Ba1 and B3 previously, reflecting the downgrade of the standalone
ratings together with the reduced systemic support assumptions and local
currency ceilings.
Please see http://www.moodys.com/viewresearchdoc.aspx?docid=PBC_143390
for the full list of affected issuers and their credit ratings.
For additional information on bank ratings, please refer to the
webpage containing Moody's related announcements http://www.moodys.com/bankratings2012.
RATINGS RATIONALE
DOWNGRADE OF STANDALONE RATINGS TO THE SOVEREIGN DEBT RATING LEVEL
The downgrades of the standalone ratings of the 31 Argentinean financial
institutions to the B3 level of the government reflects Moody's
assessment that the creditworthiness of these entities is highly correlated
with that of the government taking into account (i) the degree to which
their businesses depend on the domestic macroeconomic and financial environment;
(ii) their direct and indirect exposures to the sovereign, and (iii)
their lack of cross border diversification.
The exceptions are Banco de Valores and MATBa, whose standalone
assessments were lowered to b2 from ba1, and to b1 from ba3,
respectively, and are now one and two notches above the level of
the Argentinean government. These exceptions reflect factors that
help mitigate the risk correlations with the government, including
their key roles as clearing bank for the stock exchange and as the largest
domestic commodities exchange, respectively, moderate direct
exposures to government debt, as well as their supportive shareholder
groups through several economic and financial crises. Valores'
b2 standalone assessment reflects its dual role as both a commercial and
clearing bank, hence exposed to macroeconomic conditions as other
banks.
In the case of the Argentinean banks, the rating downgrades also
incorporate the risks related to increasing government intervention through
mechanisms unfavorable to the earnings generation, funding dynamics,
and financial flexibility of financial institutions. Such mechanisms
include the application of ever tighter foreign exchange controls and
other administrative and legal measures that have weakened confidence
in the financial system as demonstrated by accelerated deposit outflows.
These policies, together with the YPF nationalization and the change
in the central bank's bylaw, also raise questions regarding
the predictability of government policies.
LOCAL CURRENCY DEPOSIT AND DEBT RATINGS LIFTED BY PARENTAL AND/OR GOVERNMENT
SUPPORT
Moody's deposit ratings incorporate assumptions about potential
external support from a parent institution, or a regional or national
government. These assumptions reflect both the capacity and the
willingness of such third parties to support a bank in the event of stress.
Increasing political risk and country risk in Argentina over the past
few years has led Moody's to reassess its assumptions about the
probability of government support that can be incorporated into financial
institutions' deposit and debt ratings, with the degree of
uplift from such assumptions depending on a bank's systemic importance
as a deposit-taker and lender.
Foreign-owned institutions in Argentina continue to have the highest
global local currency deposit rating of Ba3 primarily due to the probability
of support from higher rated foreign parent institutions and aligned to
the shareholder's percentage ownership. These banks include
Banco Santander Rio S.A., HSBC Bank Argentina S.A.,
Standard Bank Argentina S.A., Banco Patagonia S.A.,
Banco Itau Argentina S.A., BNP Paribas (Argentina
branch), Toyota Compania Financiera de Argentina S.A.,
Banco Cetelem Argentina S.A., Banco de Servicios Financieros
S.A., and Caterpillar Financial Services Argentina
S.A.
PSA Finance Argentina S.A. and GPAT Compania Financiera
S.A. are now rated B1 for local currency deposits,
also reflecting support from their higher-rated parent institutions,
Banque PSA Finance and Banco Patagonia, respectively. Banco
de la Ciudad de Buenos Aires is the only domestic bank now rated at the
B1 level because it benefits from uplift due to the assumption of the
probability of support from its parent, the City of Buenos Aires,
currently rated B1 in local currency by Moody's.
Large domestically-owned institutions whose standalone ratings
receive uplift due to our assessment of the probability of systemic support
are now rated B2 for global local currency deposits . They are:
Banco Macro S.A., Banco del Tucum?n S.A.,
Banco de Galicia y Buenos Aires S.A., Compa??a
Financiera Argentina S.A., Banco Comafi S.A.,
Banco del Chubut, Banco de Santiago del Estero S.A.,
Nuevo Banco de la Rioja S.A., Banco Credicoop Cooperativo
Limitado, Banco de Valores S.A., Banco de Inversi?n
y Comercio Exterior S.A., Banco Supervielle S.A.,
and Cordial Compa??a Financiera S.A. The B3
local currency issuer rating of Grupo Supervielle reflects one notch of
subordination from its main operating company, Banco Supervielle.
The B3 rating of the following institutions is in line with their standalone
ratings as they do not benefit from uplift due to systemic support,
given their more modest deposit and loan market shares: Banco Piano
S.A., Banco S?enz S.A.,
Banco de Servicios y Transacciones S.A., Banco Industrial
S.A., Multifinanzas Compa??a Financiera
S.A., Banco de la Provincia de C?rdoba S.A.,
Banco Finansur S.A., Banco Columbia S.A.,
and Caja de Cr?dito Cuenca Cooperativo Ltda.
The local currency senior and subordinated debt ratings of 13 banks and
5 finance companies have been downgraded in line with the downgrades of
the local currency deposit ratings. As per Moody's notching
convention, subordinated debts are rated one notch below the issuers'
deposit ratings.
FOREIGN CURRENCY DEPOSIT AND DEBT RATINGS
Foreign currency deposit ratings of Caa1 for all issuers were unaffected
by this rating action and remain with stable outlooks. However,
the B2 foreign currency senior debt ratings of three institutions --
Banco de Servicios y Transacciones, Banco Saenz, and Banco
Columbia were lowered by one notch to B3, mapping directly from
their local currency debt ratings. The foreign currency subordinated
debt ratings of Banco Galicia and Banco Supervielle were also lowered
to B3 from B2, indicating one notch of subordination.
In the case of Banco Macro's foreign currency junior subordinated
debt, the rating has been downgraded by four notches from B2 to
Caa3, and on the national scale, by seven notches from Aa3.ar
to Caa1.ar. The rating reflects a three-notch differential
from the bank's B3 standalone rating in accordance with Moody's
hybrid methodology for banks, and reflects the instrument's
deep subordination and optional deferral and loss absorption features.
NATIONAL SCALE RATINGS
The downgrade of the global local currency deposit and issuer ratings
of 26 banks and finance companies has led to the downgrade of their deposit
ratings on the Argentinean national scale by one to four notches.
The local and/or foreign currency national scale debt ratings of 14 institutions
have also been downgraded by between one and two notches.
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 ".ar"
for Argentina. For further information on Moody's approach to national
scale ratings, please refer to Moody's Rating Methodology published
in March 2011 entitled "Mapping Moody's National Scale Ratings to
Global Scale Ratings.
WHAT COULD MOVE THE RATINGS UP/DOWN
As the key drivers of today's actions are largely structural in
nature, upward rating movement is unlikely in the near term.
Beyond the foreseeable future, a combination of an improving operating
environment and an improvement in the credit risk profile of the national
government could positively influence Argentinean banks' ratings.
Conversely, deterioration in the banks' operating environment
and/or a weakening of their standalone financial fundamentals could exert
further downward pressure on the ratings.
WHICH FIRMS ARE AFFECTED
Foreign-Owned Banks with Uplift due to Parental Support
Banco Santander Rio S.A.
HSBC Bank Argentina S.A.
Standard Bank Argentina S.A.
Banco Patagonia S.A.
GPAT Compania Financiera S.A.
Banco Itau Argentina S.A.
BNP Paribas (Argentine branch)
PSA Finance Argentina S.A.
Banco de Servicios Financieros S.A.
Banco Cetelem S.A.
Caterpillar Financial Services Argentina S.A.
Toyota Compa??a Financiera S.A.
Domestically-Owned Banks with Uplift due to Systemic Support
Banco de Galicia y Buenos Aires S.A.
Compania Financiera Argentina S.A.
Banco Supervielle
Grupo Supervielle
Cordial Compania Financiera S.A.
Banco de la Ciudad y Buenos Aires S.A.
Banco Macro S.A.
Banco del Tucum?n S.A.
Banco Credicoop Cooperativo Limitado
Banco de Valores S.A.
Banco Comafi S.A.
Banco de Inversi?n y Comercio Exterior
Banco del Chubut S.A.
Banco de Santiago del Estero S.A.
Banco de Nuevo Rioja S.A.
Domestic institutions Not Benefiting from Parental or Systemic Support
Banco Columbia S.A.
Banco Piano S.A.
Banco S?enz S.A.
Banco de Servicios y Transacciones S.A.
Banco Industrial S.A.
Multifinanzas Compa??a Financiera S.A.
Banco de la Provincia de C?rdoba S.A.
Banco Finansur S.A.
Caja de Cr?dito Cuenca Cooperativo Ltda.
Mercado a Termino de Buenos Aires S.A. (MATba)
REGULATORY DISCLOSURES
The following Global Scale Credit Ratings are EU endorsed by Moody's
Investors Service Ltd., One Canada Square, Canary Wharf,
London E 14 5FA, UK, in accordance with Art.4 paragraph
3 of the Regulation (EC) No 1060/2009 on Credit Rating Agencies.
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.
Banco Comafi S.A.
Banco de Galicia y Buenos Aires S.A.
Banco de Inversion y Comercio Exterior S.A.
Banco de la Ciudad de Buenos Aires
Banco Macro S.A.
Banco Patagonia S.A.
Banco Santander Rio S.A.
Banco Supervielle S.A.
Deutsche Bank S.A. (Argentina)
HSBC Bank Argentina S.A.
Standard Bank Argentina S.A.
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 the rating are the following:
parties 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, obligations or credits 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.
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.
Maria Valeria Azconegui
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 concludes review for downgrade of Argentinean financial institutions
