Buenos Aires, January 10, 2011 -- Moody's Investors Service has assigned a bank financial strength rating
(BFSR) of E+ (plus) to Banco de Servicios y Transacciones S.A.
(BST). Moody's has also assigned the bank long- and short-term
global local-currency deposit ratings of B2 and Not Prime,
respectively, as well as long- and short-term foreign-currency
deposit ratings of Caa1 and Not Prime, respectively.
At the same time, Moody's has assigned an A1.ar local-currency
deposit rating and a Ba1.ar foreign-currency deposit rating
to the bank on the Argentine national scale.
The outlook on all the ratings is stable.
The following ratings have been assigned to Banco de Servicios y Transacciones
S.A.:
Bank Financial Strength Rating: E+, stable outlook
Long- and short-term global local-currency deposit
rating: B2 and Not Prime, stable outlook
Long- and short-term global foreign-currency deposit
rating: Caa1 and Not Prime, stable outlook
Long-term national scale local-currency deposit rating:
A1.ar
Long-term national scale foreign-currency deposit rating:
Ba1.ar
Ar$500 million global medium-term note multicurrency program:
Long-term global foreign-currency debt rating: (P)B2,
stable outlook
Long-term global local-currency debt rating: (P)B2,
stable outlook
National scale rating foreign-currency debt rating: A1.ar
National scale rating local-currency debt rating: A1.ar
Ar$50 million senior notes
Global local-currency debt rating: B3, stable outlook
National scale rating for local currency debt: A2.ar
RATINGS RATIONALE
The BFSR largely derives from the bank's very modest franchise,
which is reflected in the small size of its balance sheet, still
limited earnings generation, as well as its small participation
in Argentina's deposit market (a 0.2% share). BST's
business focus has been transitioning from wholesale and commercial banking
towards consumer finance, and particularly payroll lending,
following the merger with its sister company, Credilogros Compañia
Financiera S.A. in January 2010.
Moody's noted that the combination has added a network of 30 branches
to BST's operations and is intended to help diversify its deposit
base, which is concentrated and predominantly wholesale funded.
BST's funding is mainly short-term and sourced from wholesale
depositors, including a relevant portion that is supplied by related
parties, with its top 10 depositors accounting for 66% of
total deposits as of September 2010.. Moreover, the
bank has traditionally relied on securitizations of its performing loan
book in order to fund its business, and is also very active in repurchase
agreements with government securities.
The ratings also incorporate the bank's weak asset quality,
as indicated by a high non-performing loan ratio of 9.4%
as of September 2010, which is in part explained by the sale of
performing loans to trusts. We anticipate that Credilogros could
contribute to improve the granularity of BST's loan portfolio,
as consumer lending grows.
Moody's noted BST's modest capitalization, which when
adjusted for the securitized assets, would position its Tier one
capital ratio below its reported. Because of the high delinquency
of its loan book and modest profitability, a thin capital cushion
provides less protection to bondholders.
The B2 global local-currency deposit rating is derived from BST's
unsupported baseline credit assessment of B2. Because we assess
a low probability of systemic support as a consequence of its small market
share in terms of deposits, the bank's deposit rating does not benefit
from any systemic uplift, and remains at B2.
Moody's has also assigned (P)B2 local-and foreign- currency
debt ratings to BST Ar$500 million global medium-term note
program. The program allows for multi-currency debt issuances.
Local- and foreign-currency debt ratings of A1.ar
were assigned to the program on the national scale.
Additionally, Moody's has assigned B3 global local-currency
and A2.ar national scale local-currency debt ratings to
the proposed Ar$50 million subordinated bonds due in 2018,
to be issued under the program.
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."
Banco de Servicios y Transacciones is headquartered in Buenos Aires,
Argentina, and had Ar$1.053 million in assets,
Ar$551.7 million in deposits and a net worth of Ar$78.2
million as of September 2010. The bank has a branch-network
of 30 branches, 16 of them located in greater Buenos Aires.
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, 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
M. Celina Vansetti
Senior Vice President
Financial Institutions Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Buenos Aires
Maria Valeria Azconegui
Analyst
Financial Institutions Group
Moody's Latin America, Calificadora de Riesgo
JOURNALISTS: (800) 666 -3506
SUBSCRIBERS: (5411) 4816-2332
Moody's Latin America, Calificadora de Riesgo
Cerrito 1186, 11th fl
Buenos Aires C1010AAX
Argentina
JOURNALISTS: (800) 666 -3506
SUBSCRIBERS: (5411) 4816-2332
Moody's rates Banco de Servicios y Transacciones S.A.
