Mexico City, July 31, 2009 -- Moody's Investors Service confirmed BBVA Bancomer's C+
bank financial strength rating (BFSR) with a stable outlook. This
concludes the review of the bank's BFSR initiated on May 20,
2009. At the same time, Moody's maintains its review
for possible downgrade on the bank's Aa2/Prime-1 local-currency
deposit ratings, as well as on its Aa2 senior debt rating,
and on the Aa3 and A1 local- and foreign-currency subordinated
debt ratings, respectively (see detailed list below). BBVA
Bancomer's Baa1/Prime-2 foreign-currency deposit and
Aaa.mx/MX-1 Mexican National Scale ratings were not subject
to the review and were affirmed with stable outlooks.
Moody's also maintains on review for possible downgrade Hipotecaria
Nacional, S.A. de C.V.'s Aa3 local
currency issuer rating.
CONFIRMATION OF BANK FINANCIAL STRENGTH RATING
In confirming BBVA Bancomer's BFSR at C+, Moody's
evaluated it under both anticipated and highly stressed scenarios.
The rating agency then concluded that the bank's capitalization
is well positioned to withstand potentially higher credit losses over
the near term at its current rating level, despite the challenges
of a difficult operating environment. This assessment is also supported
by the bank's earnings-generation capacity and diversity,
as well as by management's conservative provisioning practices.
According to David Olivares-Villagomez -- Moody's Senior
Credit Officer and lead analyst for Mexican banks -- "Moody's
recognizes the bank's track record of profitability, which
derives from its earnings diversity, low-cost core deposit
base, and efficient operation overall". "We also
acknowledge the bank's dominant position in the Mexican market,
which provides for a strong local franchise," the analyst
The review of BBVA Bancomer's BFSR was prompted by Moody's
initiative of recalibrating banks' stand-alone ratings.
The agency is doing this (a) by using scenario analysis to estimate losses
on banks' risk assets and (b) by placing increased weight to capital
and future earnings prospects. The details of this approach are
described in Moody's Special Comment "Calibrating Bank Ratings
in the Context of the Global Financial Crisis", published
in February 2009.
REVIEW OF DEPOSIT AND DEBT RATINGS
Moody's explained that although the review of the parent bank Banco
Bilbao Vizcaya Argentaria (BBVA)'s ratings has been concluded,
the deposit and debt ratings of BBVA Bancomer remain under review for
possible downgrade. "This is so because we are also applying
our revised assumptions of systemic support for Mexican banks,"
Mr. Olivares-Villagomez explains, "which is
outlined in a recent special comment entitled 'Financial Crisis
More Closely Aligns Bank Credit Risk and Government Ratings in Non-Aaa
Countries'" (Published in May 2009.)
The review will determine the extent to which the level of systemic support
that is currently incorporated into BBVA Bancomer's local-currency
ratings should be more closely aligned with the Mexican government's
own debt capacity, which is indicated by the nation's Baa1
local currency bond rating.
In reviewing the subordinated debt ratings, Moody's will take
into account the outcome of its review of BBVA Bancomer's senior
debt and deposit ratings.
LAST RATING ACTIONS AND METHODOLOGIES
The last rating action on BBVA Bancomer was on June 18, 2009 when
Moody's assigned Aa3 and Aaa.mx subordinated debt ratings to the
bank's subordinated notes. On May 20, 2009, Moody's
placed the bank's BFSR and deposit and debt ratings on review for
The principal methodologies used in rating BBVA Bancomer were "Bank Financial
Strength Ratings: Global Methodology" and "Incorporation of Joint
Default Analysis into Moody's Bank Ratings: A Refined Methodology",
which can be found on www.moodys.com in the Credit Policy
& Methodologies directory, in the Ratings Methodologies subdirectory.
Other methodologies and factors that may have been considered in the rating
process can also be found in the Credit Policy & Methodologies directory.
The long-term Mexican National Scale rating of Aaa1.mx indicates
issuers or issues with the strongest creditworthiness relative to other
domestic issuers. The short-term Mexican National Scale
rating of MX-1 indicates that the issuer has the strongest ability
to repay short term senior unsecured debt obligations relative to other
BBVA Bancomer is a wholly owned subsidiary of Grupo Financiero BBVA Bancomer,
S.A.B. de C.V. As of June 30,
2009, the bank had around Mx$1,128 billion (US$83.5
billion) in assets.
LIST OF RATINGS AND ACTIONS TAKEN
The following rating on BBVA Bancomer, S.A. was confirmed
with stable outlook:
- Bank Financial Strength Rating of C+
The following ratings remain on review for possible downgrade:
- Global local-currency deposits, long-term
and short-term, at Aa2/Prime-1
- Global local-currency senior debt, long-term,
- Global local-currency subordinated debt, long--term,
- Global local-currency junior subordinated debt,
long-term, at Aa3
- Foreign currency subordinated debt, long-term,
The following ratings on BBVA Bancomer are not subject to the review:
- Foreign currency deposits, long- and short-term,
- Mexican National Scale deposit and debt ratings (senior and subordinated),
long- and short-term, at Aaa.mx/MX-1
The following issuer rating on Hipotecaria Nacional, S.A.
de C.V. remain on review for possible downgrade:
- Global local-currency rating, long-term,
David Olivares Villagomez
VP - Senior Credit Officer
Financial Institutions Group
Moody's de Mexico S.A. de C.V
Moody's confirms BBVA Bancomer's C+ financial strength; maintains local-currency deposits on review
M. Celina Vansetti
Senior Vice President
Financial Institutions Group
Moody's Investors Service