TEXT - S&P may still cut Oriental Financial Group rating
Overview -- On Dec. 18, Puerto Rico-based regional banking company Oriental Financial Group announced that it had completed its acquisition of Banco Bilbao Vizcaya Argentaria Puerto Rico. -- We are keeping our ratings on Oriental, including the 'BB+' counterparty credit rating, on CreditWatch with negative implications. -- We expect to resolve the CreditWatch listing based on our assessment of the pro forma capital structure, interim financial results, and our updated financial projections. Rating Action On Dec. 21, 2012, Standard & Poor's Ratings Services kept its 'BB+' counterparty credit rating on Puerto Rico-based regional banking company Oriental Financial Group on CreditWatch with negative implications. Following the acquisition, $50 million of subordinated notes issued by BBVA PR are now obligations of Oriental Bank & Trust. Rationale The CreditWatch action follows Oriental's announcement that it has completed its previously announced acquisition of the Puerto Rico-based operations of Banco Bilbao Vizcaya Argentaria S.A. (BBVA S.A.). These consist of all of the outstanding common stock of BBVAPR Holding Corp. (the sole shareholder of Banco Bilbao Vizcaya Argentaria Puerto Rico (BBVA PR), a Puerto Rico-chartered commercial bank, and BBVA Seguros Inc., a subsidiary offering insurance services) and BBVA Securities of Puerto Rico Inc., a registered broker-dealer, for $500 million in cash. Immediately following the closing of the acquisition, BBVA PR merged into Oriental Bank & Trust, a wholly owned subsidiary of Oriental, with Oriental Bank continuing as the surviving entity. CreditWatch We expect that Oriental will be able to successfully integrate BBVA PR given its knowledge of the local market, similar geographic footprint, and experience integrating Eurobank, which it acquired in 2010 in a Federal Deposit Insurance Corp.-supported transaction. We will evaluate the ultimate business and financial profiles of the combined entity, as well as interim financial results, to update the rating on the company. We will also evaluate Oriental's plans regarding the integration, branding, advertising, and marketing of the combined companies. We could affirm the rating on Oriental or lower it by no more than two notches to 'BB-', based on the results of our assessment of the pro forma capital structure, interim financial results, and our updated financial projections. Ratings Score Snapshot Bank Holding Company Rating BB+/Watch Neg/-- Issuer Credit Rating BBB-/Watch Neg/-- SACP bbb- Anchor bbb+ Business Position Weak (-2) Capital and Earnings Very Strong (+2) Risk Position Moderate (-1) Funding and Liquidity Below Average and Adequate (-1) Support 0 GRE Support 0 Group Support 0 Sovereign Support 0 Additional Factors 0
- Exclusive: Secret contract tied NSA and security industry pioneer |
- U.S. aircraft hit by gunfire in South Sudan as conflict worsens
- Four men arrested in deadly N.J. shopping mall carjacking
- With Fed out of the way, what's next on Wall Street?
- Analysis: Lost Brazil order raises threat to Boeing fighter jets