TEXT-S&P puts Corpbanca, Inversiones CorpGroup on watch negative
Overview -- On Oct. 9, 2012, Chile-based bank Corpbanca announced the agreement of its parent company, Inversiones CorpGroup Interhold, to acquire Colombia-based Helm Bank. -- We are placing our 'BBB+' ratings on Corpbanca and 'BB' rating on Inversiones CorpGroup Interhold on CreditWatch with negative implications reflecting the potential impact of the increased exposure to Colombia. -- We will evaluate the acquisition's impact on Corpbanca's anchor stand-alone credit profile, capital charges, risk adjusted capital ratios, and the resulting capital structure. -- We intend to resolve the CreditWatch listings after completion of regulatory approvals in Chile and Colombia. Rationale On Oct. 10, 2012, Standard & Poor's Ratings Services placed its 'BBB+' ratings on Corpbanca and 'BB' rating on Inversiones CorpGroup Interhold S.A. on CreditWatch with negative implications. The rating action followed the announcement of the agreement to acquire 100% of Helm Bank for $1.28 billion. The acquisition would occur through Corpbanca's subsidiary, Banco CorpBanca Colombia, and will be financed with an equity issuance of about $1 billion and own resources. Corpbanca will subscribe about $285 million of this equity issuance, Helm Corp. about $440 million, and other investors the remaining portion. Following the acquisition, Banco Corpbanca Colombia would become the fifth-largest bank in Colombia with a market share of about 7% in terms of loans and deposits and an asset base of $11.8 billion. Corpbanca will own 64% of merged operations in Colombia. To complete capital infusions at Banco CorpBanca Colombia and to finance its expansion in the Chilean market, Corpbanca would make an equity issuance for $600 million and issue subordinated notes. International Finance Corp. will subscribe part of this equity issuance, as recently announced. Our ratings on Corpbanca reflect its "adequate" (as our criteria define it) business position, "moderate" capital and earnings, "adequate" risk position, "average" funding, and "adequate" liquidity, and our view of a "moderate" likelihood of government support, given Corpbanca's moderate systemic importance to the Republic of Chile (foreign currency: A+/Positive/A-1; local currency: AA/Positive/A-1+) and our assessment of the government as "supportive" of the country's banking system. Our ratings on Inversiones CorpGroup Interhold reflect its heavy reliance on dividends from indirect subsidiary Corpbanca, high debt levels, and aggressive business expansion. The group's good position in the Chilean banking and insurance sectors, and Corpbanca's good earnings capacity are partly mitigating factors. Inversiones CorpGroup Interhold indirectly owns 45.9% of Corpbanca. A diverse group of investors, including local stock brokerage firms and local pension funds, holds the remaining stake in Corpbanca. CreditWatch The CreditWatch listings reflect the acquisition's potential impact on both Corpbanca and Inversiones CorpGroup Interhold. We will evaluate the impact on Corpbanca's anchor stand-alone credit profile, capital charges, and risk-adjusted capital ratios due to higher exposure to Colombia (which faces higher economic risks than Chile) and resulting capital structure after the acquisition. We intend to resolve the CreditWatch listing after completion of regulatory approvals in Chile and Colombia. Related Criteria And Research -- Banks: Rating Methodology And Assumptions, Nov. 9, 2011 -- Use Of CreditWatch And Outlooks, Sept. 14, 2009 -- Analytical Approach To Assessing Nonoperating Holding Companies, March 17, 2009 Ratings List Ratings On CreditWatch To From Corpbanca Counterparty Credit Rating BBB+/Watch Neg/A-2 BBB+/Stable/A-2 Senior Unsecured BBB+/Watch Neg BBB+ Inversiones CorpGroup Interhold Ltda. Counterparty Credit Rating BB/Watch Neg/-- BB/Stable/-- Senior Secured BB/Watch Neg BB Complete ratings information is available to subscribers of RatingsDirect on the Global Credit Portal at www.globalcreditportal.com. All ratings affected by this rating action can be found on Standard & Poor's public Web site at www.standardandpoors.com. Use the Ratings search box located in the left column.
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