Fitch Downgrades Banco de la Nacion Argentina's (Sucursal Uruguay) LC IDR to 'CCC'

Thu Aug 7, 2014 11:52am EDT

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(The following statement was released by the rating agency) MONTERREY/NEW YORK, August 07 (Fitch) Fitch Ratings has downgraded Banco de la Nacion Argentina's (Sucursal Uruguay) (BNAUY) Local Currency (LC) long-term Issuer Default Rating (IDR) to 'CCC' from 'B-'. Simultaneously, Fitch has upgraded the bank's Foreign Currency (FC) long-term IDR to 'CCC' from 'CC' and affirmed its Support Rating at '5'. KEY RATING DRIVERS IDRs The downgrade of BNAUY's LC IDR to 'CCC' from 'B-'/Negative Outlook aligns it with the LCR IDR of Argentina. This action follows the recent restrictive default of the Argentine sovereign, which also triggered a downgrade of the country's sovereign long-term LC IDR and Country Ceiling to 'CCC' from 'B-' (for additional details, see 'Fitch Downgrades Argentina's FC IDR to 'RD', dated July 31, 2014 and available at www.fitchratings.com). The upgrade of BNAUY's FC IDR to 'CCC' from 'CC' also aligns it with the credit worthiness of Argentina. Although the sovereign's FC IDR was downgraded to 'RD' (due to the current default status of certain debt securities affected by a court ruling), on Fitch's view the sovereign payment capacity is currently measured by the 'CCC' rating on its LC and FC debt securities issued under Argentina Law. BNAUY is a fully integrated branch of Banco de la Nacion Argentina's (BNA). BNA's creditworthiness is intrinsically aligned with that of the sovereign, not only because the existing explicit guarantee in place, but also given its systemic importance as the largest bank in Argentina. BNAUY's ratings reflect the high probability of receiving support, if it were needed, from the Republic of Argentina. BNA liabilities (including its branches abroad) are fully guaranteed by the Republic of Argentina. BNA is the largest commercial bank in Argentina, with 27% deposit and 21% loan market shares, with the largest nationwide coverage and is a leader in most business lines. Similar to other government-owned banks, BNA has a sizable exposure to both loans and investments in government securities while enjoying the best funding base in its home country. Foreign branches are used by BNA (including BNAUY) to foster trade finance operations and the operations of Argentinean companies abroad. Government exposure at BNAUY is significantly below than of BNA. SUPPORT RATING BANUY's support rating of '5' considers that external support, although possible (and backed by an explicit guarantee), cannot be relied upon, given the high political interference risk and ample economic imbalances of the Republic of Argentina. RATING SENSITIVITIES - IDRS & SUPPORT RATING The FC and LC IDRs do not have Rating Outlooks. BNAUY's ratings continue sensitive to Argentina's sovereign rating and its capacity and willingness to provide support to BNA and its branches. Contact: Primary Analyst Alejandro Tapia Director +52 818 399 9156 Fitch Mexico S.A. de C.V. Prol. Alfonso Reyes 2612 64920 Monterrey, Mexico Secondary Analyst Veronica Chau Director +52 818 399 9169 Committee Chairperson Franklin Satarelli Managing Director +1-212-908-0739 Media Relations: Elizabeth Fogerty, New York, Tel: +1 (212) 908 0526, Email: elizabeth.fogerty@fitchratings.com. Additional information is available on www.fitchratings.com Applicable Criteria and Related Research: --'Global Financial Institutions Rating Criteria', Jan. 31, 2014; --'Rating FI Subsidiaries and Holding Companies', Aug. 10, 2012. Applicable Criteria and Related Research: Global Financial Institutions Rating Criteria here Rating FI Subsidiaries and Holding Companies here Additional Disclosure Solicitation Status here ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

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