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16 Mar 2011
New York, March 16, 2011 -- Moody's Investors Service has assigned a bank financial strength
rating (BFSR) of D+ to BAC International Bank, Inc.
(BAC), a 100%-owned subsidiary of Banco de Bogota.
Moody's also assigned BAC global scale long and short term foreign
currency deposit ratings of Baa3 and Prime-3, respectively.
The rating outlook is stable.
The following ratings were assigned to BAC:
Bank financial strength rating: D+, stable
Long term global local currency deposit rating: Baa3, stable
Short term global local currency deposit rating: Prime-3
Long term foreign currency deposit rating: Baa3, stable
Short term foreign currency deposit rating: Prime-3
RATINGS RATIONALE
Moody's said that BAC's D+ BFSR and Baa3 stand-alone
baseline credit assessment are supported by the bank's leading credit
card and banking franchise in Central America and established regional
footprint that position the bank well to take advantage of growth opportunities
in retail and commercial banking throughout the region. The stand-alone
ratings also reflect the bank's good profitability, fee generating
capacity and earnings diversification, as well as its conservative
management of asset quality, liquidity, and capital.
BAC's operations and profitability benefit from strong customer-based
core funding that emanates from its regional branch, ATM,
and electronic payments network and is enhanced by its account and point-of-sale
relationships with merchants through its card acquisition business.
Positive economic and regulatory trends in the region also bode well for
BAC's growth potential and credit quality.
The Baa3 rating also takes into account BAC's experienced management
team and tested risk management and governance practices. While
there are transparency and control issues posed by the group's complex
corporate structure across numerous jurisdictions, Moody's
indicated that the group's centralized management of marketing,
credit risk and systems of control, compliance, and audit
help to mitigate those concerns. BAC is moreover subject to banking
regulations in all of its markets of operation, including consolidated
oversight by the Panamanian Superintendency of Banks as well as by the
Colombian banking supervisors.
BAC's December 2010 acquisition by Grupo Aval of Colombia through
its flagship bank, Banco de Bogota (Bogota), has been cited
as strategic by its new owner because of BAC's expertise in credit
card, mortgage, and consumer banking as well as a unique presence
throughout Central America, a natural footprint for Bogota given
both trade and cultural ties among the countries. While it remains
unclear at this point what the financial impact the acquisition may ultimately
have on BAC, Moody's views as relatively limited the risk
that the parent would enact policies that would impair BAC's financial
strength.
A rating challenge for BAC is its riskier credit profile than that of
the average commercial bank, because of its primary focus on consumer
finance and in lesser developed Central American markets. Credit
cards comprise some 25% of its loan book, with more than
half concentrated in upper income customer segments, while residential
mortgages comprise another 30%, together balanced by a broadly
diversified portfolio of commercial loans in the various countries.
The lack of true lenders of last resort in the fully or highly dollarized
markets in which the bank operates also poses a challenge, as extraordinary
support would be required in US dollars given the bank's predominantly
US dollar-denominated balance sheet. This risk is partly
mitigated by BAC's local core funding base and conservative liquidity
management, which includes typically large holdings of cash and
high quality securities, partly reflecting relatively high regulatory
reserve requirements. A largely short term and relatively granular
loan portfolio also represents a potential source of alternate liquidity
for the bank as it did during the recent financial crisis, said
Moody's.
Systemic support is therefore not incorporated in BAC's Baa3 and
Prime-3 foreign currency deposit ratings. Moody's,
however, assesses a moderate probability of parental support because
of the bank's dollarization and cross border domicile, which
currently does not result in any uplift to the deposit ratings.
The principal methodologies used in rating BAC 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. Other methodologies
and factors that may have been considered in the process of rating this
issuer can also be found on Moody's website.
Incorporated in Panama, BAC is the third largest banking group in
Central America in assets and deposits, and the fourth largest in
equity. As of December 31, 2010, the bank reported
total assets of US$ 8.4 billion, deposits of $6.0
billion, equity of $930 million, and annual net income
of $151.2 million.
REGULATORY DISCLOSURES
Information sources used to prepare the credit rating are the following:
parties involved in the ratings, parties not involved in the ratings,
public information, and confidential and proprietary Moody's
Investors Service information.
Moody's Investors Service considers the quality of information available
on the issuer or obligation satisfactory for the purposes of assigning
a credit rating.
Moody's adopts all necessary measures so that the information it uses
in assigning a credit 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 ratings tab on the issuer/entity page on Moodys.com
for the last rating action and the rating history.
The date on which some Credit Ratings were first released goes back to
a time before Moody's Investors Service's Credit Ratings were fully digitized
and accurate data may not be available. Consequently, Moody's
Investors Service 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 the Credit Policy page on Moodys.com for the methodologies
used in determining ratings, further information on the meaning
of each rating category and the definition of default and recovery.
New York
Jeanne Del Casino
VP - Senior Credit Officer
Financial Institutions Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
New York
M. Celina Vansetti
Senior Vice President
Financial Institutions Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Moody's Investors Service
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Moody's rates BAC D+ for financial strength; Baa3 for deposits
No Related Data.
© 2018 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All rights reserved. CREDIT RATINGS ISSUED BY MOODY'S INVESTORS SERVICE, INC. AND ITS RATINGS AFFILIATES (“MIS”) ARE MOODY’S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND MOODY’S PUBLICATIONS MAY INCLUDE MOODY’S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES. MOODY’S DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL, FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS AND MOODY’S OPINIONS INCLUDED IN MOODY’S PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. MOODY’S PUBLICATIONS MAY ALSO INCLUDE QUANTITATIVE MODEL-BASED ESTIMATES OF CREDIT RISK AND RELATED OPINIONS OR COMMENTARY PUBLISHED BY MOODY’S ANALYTICS, INC. CREDIT RATINGS AND MOODY’S PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND CREDIT RATINGS AND MOODY’S PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. NEITHER CREDIT RATINGS NOR MOODY’S PUBLICATIONS COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MOODY’S ISSUES ITS CREDIT RATINGS AND PUBLISHES MOODY’S PUBLICATIONS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL, WITH DUE CARE, MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING, OR SALE. MOODY’S CREDIT RATINGS AND MOODY’S PUBLICATIONS ARE NOT INTENDED FOR USE BY RETAIL INVESTORS AND IT WOULD BE RECKLESS AND INAPPROPRIATE FOR RETAIL INVESTORS TO USE MOODY’S CREDIT RATINGS OR MOODY’S PUBLICATIONS WHEN MAKING AN INVESTMENT DECISION. IF IN DOUBT YOU SHOULD CONTACT YOUR FINANCIAL OR OTHER PROFESSIONAL ADVISER. ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY LAW, INCLUDING BUT NOT LIMITED TO, COPYRIGHT LAW, AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT MOODY’S PRIOR WRITTEN CONSENT.
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