Mexico, October 13, 2011 -- Moody's Investors Service downgraded Banco Multiva, S.A.'s
global local and foreign currency deposits to B3, from B2,
with stable outlook. At the same time, Moody's de Mexico
downgraded the long term Mexican National Scale to Ba2.mx from
Baa3.mx, and the short term ratings to MX-4,
from MX-3. The bank's E+ financial strength rating
(BFSR) was affirmed. All the ratings have stable outlooks.
The global local currency long term issuer rating of Casa de Bolsa Multiva,
S.A. de C.V. (CB Multiva) was also downgraded
to B3, from B2. Moody's de Mexico also downgraded CB
Multiva's Mexican National Scale issuer ratings to Ba2.mx/MX-4
from Baa3.mx/MX-3. All these ratings have stable
outlooks.
RATINGS RATIONALE
Moody's affirmed Banco Multiva's E+ BFSR but changed
the unsupported baseline credit assessment (BCA) to B3 from B2.
In changing the BCA to B3, Moody's cited the bank's
demonstrated high risk appetite and sizable credit risk concentration,
as a result of a newly granted loan to the highly-indebted Mexican
state of Coahuila (Coahuila). The 20-year loan represents
over one-third of the bank's total loan portfolio and a materially-high
level of 2.6 times Banco Multiva's capital base.
Moody's acknowledges that the loan to Coahuila is secured by tax
participation receipts from the Mexican federal government; nevertheless,
it elevates the bank's credit concentration risks beyond conservative
limits, with potential negative effect on asset quality, capital
and earnings were such exposures to become problem credits. Moody's
measures credit concentration as exposures to any single industry segment
or to large single creditors relative to a bank's core profits and
core capital.
Moody's also notes that these exposures represent a long-term
funding challenge for Banco Multiva, in light of the predominantly
medium-term profile of its liabilities. In light of the
important balance sheet mismatches, the bank is therefore challenged
to expand and diversify its long term funding sources to support the now
much longer duration of its loan book.
Moody's also highlighted that the downgrade of Banco Multiva's
ratings reflects the rating agency's concerns regarding the bank's
risk management structure and practices as well as its expansion strategy
to new sectors in the bank's positioning.
Located in Mexico City, Mexico and with total assets of Mx$14.8
billion as of June 2011, Banco Multiva is a small boutique bank
in Mexico.
Downgrade of Casa de Bolsa Multiva, S.A. de C.V:
Moody's downgrade of CB Banco Multiva' global local currency
issuer rating to B3 from B2 reflects its sister bank's now weaker
intrinsic strength. Our ratings on CB Multiva continue to consider
a high level of integration between the brokerage firm and its sister
bank, including sharing of infrastructure, risk management
structure and practices, technological platforms and staff among
other factors. Moody's noted that CB Multiva's franchise
and core earnings generation have not so far been affected by the bank's
heightened risk concentrations.
The methodologies used in this rating were Bank Financial Strength Ratings:
Global Methodology published in February 2007, and Incorporation
of Joint Default Analysis into Moody's Bank Ratings: A Refined Methodology
published in March 2007. Please see the Credit Policy page on www.moodys.com
for a copy of these methodologies.
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 ".mx"
for Mexico. For further information on Moody's approach to national
scale ratings, please refer to Moody's Rating Implementation Guidance
published in August 2010 entitled "Mapping Moody's National Scale
Ratings to Global Scale Ratings".
REGULATORY DISCLOSURES
The Global Scale Credit Ratings on this press release that are issued
by one of Moody's affiliates outside the EU are considered EU Qualified
by Extension and therefore available for regulatory use in the EU.
Further information on the EU endorsement status and on the Moody's
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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
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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
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Information sources used to prepare the rating are the following :
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the lead rating analyst and to the Moody's legal entity that has issued
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David Olivares Villagomez
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: 001-888-779-5833
SUBSCRIBERS:52-55-1253-5700
M. Celina Vansetti
MD - Banking
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 downgrades Banco Multiva' deposit ratings to B3, outlook stable
