(Repeat for additional subscribers)
June 13 (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
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.