Mexico, May 22, 2012 -- Moody's Investors Service today confirmed the ratings of Banco de Bogotá,
of its group holding, Grupo Aval Acciones y Valores S.A.
(Grupo Aval) and the holding company's Cayman Islands subsidiary,
Grupo Aval Limited. The outlook on all the ratings is now stable.
These actions conclude the review for downgrade initiated on 15 March
2012 related to Moody's ongoing global review affecting banks whose
standalone ratings are higher than those of the countries in which they
are domiciled. The review is discussed in the rating implementation
guidance "How Sovereign Credit Quality May Affect Other Ratings" (published
on 13 February 2012), and further detailed in the special comment
"Banks and Sovereigns: Risk Correlations Constrain Standalone Bank
Credit Assessments" (published on 30 April 2012).
The following ratings of Banco de Bogotá were confirmed with a
stable outlook:
Bank financial strength rating (BFSR) of C-
Long term local currency deposit rating of Baa1
Short term local currency deposit rating of Prime-2
Long term foreign currency debt rating of Baa2
The following ratings of Grupo Aval were confirmed with a stable outlook:
Long term local currency issuer rating of Baa3
Short term local currency issuer rating of Prime-3
Long term foreign currency issuer rating of Baa3
Short term foreign currency issuer rating of Prime-3
The following ratings of Grupo Aval Limited were confirmed with a stable
outlook:
Long term foreign currency debt rating: Baa3
RATINGS RATIONALE FOR BANCO DE BOGOTÁ
The confirmation of the C- standalone bank financial strength rating
of Banco de Bogotá, which translates to a baa2 standalone
credit assessment, incorporates the bank's cross-border
diversification, lack of meaningful exposure to Colombian government
risk via holdings of government securities or loans, and limited
reliance on confidence-sensitive market funding. The bank's
baa2 standalone credit assessment places it one notch above the Baa3 Colombian
government bond rating.
Confirmation of the standalone credit assessment (BCA) at baa2
In confirming Banco de Bogotá's ratings, Moody's
notes that the bank benefits from cross-border diversification
in terms of loans, deposits and earnings in six Central American
countries in addition to Colombia. As of its year-end 31
December 2011, about one-third of Banco de Bogotá's
assets and earnings were originated by its wholly-owned subsidiaries
in Costa Rica, Honduras, Panama, El Salvador,
Guatemala and Nicaragua through its 100% ownership of BAC International
Bank, Inc. (BAC, D+/baa3/Baa3). Although
the credit ratings of some of these countries are below Colombia's
Baa3, there is relatively low correlation among their respective
operating environments, adding to the geographic diversification
that shields Banco de Bogotá from potential earnings volatility
in its home market. Banco de Bogotá also has the capital,
earnings and reserves to withstand a deterioration in the credit quality
of loans and of investments in government securities under Moody's
adverse case scenario.
The agency also notes that Banco de Bogotá is relatively well insulated
from a government debt crisis that could undermine its solvency due to
its limited exposure to Colombian government debt, that represents
77.2% of Tier 1 capital as of year-end 2011.
The bank's exposure to debt from Central American governments is
also low, at 11.9% of Tier 1 capital, while
its loan exposures to Colombian and Central American governments is a
negligible 0.4% of total assets.
Because of its ample core deposit base in all the markets in which it
operates, Banco de Bogotá does not rely on either interbank
or capital markets funding, which represented 14% and 4%
of its total funding, respectively, as of 31 December 2011.
Approximately 68% of the bank's funding is deposit-based
and sourced domestically from customers in local currency, limiting
its sensitivity to contagion risks in times of stress or to a negative
shift in market sentiment in the event of a sovereign crisis.
Banco de Bogotá's baa2 standalone credit assessment is also indicative
of the bank's well established franchise as the second-largest
bank in Colombia and as part of the country's largest financial conglomerate
(Grupo Aval). Banco de Bogotá is also the third-largest
banking group in Central America, through BAC. The bank's
stable financial profile is supported by ample margins and an efficient
cost structure, as well as its proactive risk management policies.
The key challenges to the bank's franchise are its high growth profile
and acquisitive strategy in Colombia and selected markets of Latin America
and the Caribbean.
The bank's Baa1 long term local currency deposit rating incorporates
Moody's assessment of a high probability of systemic support for
Banco de Bogotá which lifts the rating by one notch from its BCA.
The long term foreign currency deposit rating of Baa3 and debt rating
of Baa2 are constrained by Colombia's foreign currency ceilings for deposits
and debt of Baa3 and Baa2, respectively.
RATINGS OF GRUPO AVAL ACCIONES Y VALORES S.A. & GRUPO
AVAL LIMITED
The local and foreign currency issuer ratings of Grupo Aval were confirmed
at Baa3, with a stable outlook, reflecting the confirmation
of the ratings of Banco de Bogotá, the holding company's
main source of earnings. The ratings also take into account Grupo
Aval's overall low levels of indebtedness on a standalone basis,
as well as its ample and stable dividend income, supported by the
standalone financial performance of the group's banking subsidiaries,
Banco de Bogotá, Banco de Occidente, Banco Popular
and Banco AV Villas. Grupo Aval's ratings also incorporate
the structural subordination of its liabilities versus those of its operating
entities.
The Baa3 debt rating of Grupo Aval Limited was also confirmed, with
a stable outlook, based on Grupo Aval's irrevocable and unconditional
guarantee of the entity's liabilities under the indenture.
The last rating action taken on Banco de Bogotá was on 15 March
2012 when Moody's placed on review for downgrade the standalone
BFSR, local currency deposit ratings and foreign currency debt rating.
Other ratings remained unchanged.
The last rating action taken on Grupo Aval was on 15 March 2012 when Moody's
placed on review for downgrade the local and foreign currency issuer ratings.
The last rating action taken on Grupo Aval Limited was on 15 March 2012
when Moody's placed on review for downgrade the foreign currency
debt rating.
The methodologies used in these rating actions were "Bank Financial Strength
Ratings: Global Methodology" (February 2007), "Incorporation
of Joint-Default Analysis into Moody's Bank Ratings: Global
Methodology" (March 2012) and "Global Securities Industry Methodology"
(December 2006). These methodologies can be found on the Credit
Policy page of www.moodys.com.
REGULATORY DISCLOSURES
The Global Scale Credit Ratings on this press release that are issued
by one of Moody's affiliates outside the EU are 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.
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.
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 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.
Felipe Carvallo
Asst Vice President - Analyst
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
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Jeanne Del Casino
VP - Senior Credit Officer
Financial Institutions Group
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Releasing Office:
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: 001-888-779-5833
SUBSCRIBERS:52-55-1253-5700
Moody's confirms Banco de Bogotá's and Grupo Aval's ratings
