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June 13 (Reuters) - (The following statement was released by the rating agency)
The Argentine central bank's move to ease borrowing conditions by setting caps on the interest rates and fees charged by banks on consumer loans should not be a major challenge to the affected banks' ratings, according to Fitch Ratings. The impacted banks maintain good asset quality and capitalization levels with adequate profitability, even after adjusting for the country's very high inflation. Ratings on Argentina's banks are constrained to no higher than 'B-' by Argentina's local currency sovereign rating (B-, Negative Outlook).
Though the central bank's action is clearly not friendly to the nation's banking sector, Fitch does not believe it represents a material challenge to local banks. The move essentially limits their room to further maneuver, should additional intervention measures be implemented.
Since 2012, when Argentina's sovereign rating was downgraded, Fitch has factored potential government interventions into bank rating assessments. That rating change was driven by increased state tightening of capital controls and the inability of certain provinces to access U.S. dollars to repay their dollar-denominated debt under local law.
We are also not surprised by the action, as other Latin American central banks in Venezuela, Ecuador and Bolivia have taken such monetary steps in the past.
Over time, we believe Argentina's banks will adjust to this limitation and find ways to compensate for the income it will forgo. Nonetheless, the risk remains for further government intervention that could materially challenge the banks.