(The following statement was released by the rating agency)
SAO PAULO/RIO DE JANEIRO/NY, September 03 (Fitch) Fitch Ratings
its review of four small and medium-sized Brazilian banks: Banco
Brasil S.A. (BIB), Banco Indusval S.A. (BI&P), Banco Sofisa S.A.
Banco Triangulo S.A. (Tribanco). A complete list of the rating
actions can be
found at the end of this press release.
The small and medium-sized Brazilian banks reviewed are
institutions with total
assets that range from BRL1 billion to BRL10 billion. All of
these banks have
relevant concentration on the liabilities side, which is
compensated by adequate
asset liability management (ALM) practices, as they show sound
and good liquidity. These banks have different characteristics:
--BIB and Sofisa have a long-term well-defined strategy with a
focus on lending
to small and medium-sized enterprises (SMEs).
--Tribanco has concentrated its strategic goals on leveraging
relationship built under Martins Group's (a related company)
--BI&P is implementing a turnaround in its strategies, aiming to
profitability and strengthen its franchises after erratic
performances over the
For further details of these entities, as well as for regulatory
please view individual rating action commentaries, published
today and available
in Fitch's websites at www.fitchratings.com and
KEY RATING DRIVERS
BIB's ratings were affirmed. The ratings reflect the bank's
stable risk profile,
adequate and stable performance, good asset quality, liquidity
capitalization. This is supported by BIB's consistent focus on
medium-sized businesses, its risk culture and the historically
solid quality of
its assets, as well as adequate liquidity. These factors are
offset by the
bank's small size, its relatively modest profitability and the
liability concentrations inherent to its business model.
BI&P's long-term national rating was downgraded to 'BBB-(bra)'
The downgrade reflects the fact that the new business model
2011, with the admission of new shareholders, has not produced
consistent results yet, which negatively affected the bank's
level. Fitch Core Capital ratio (FCC), which was at comfortable
December 2010, fell gradually, reaching 11.63% in June 2014,
albeit the BRL201
million capital increase in 2011.
Sofisa's ratings were affirmed. The ratings reflect its
high capitalization and prudent liquidity, besides the good
quality of assets
since 2013. The ratings reflect, however, also the fact that it
is a niche bank
with typical concentrations, particularly in funding, and low
Tribanco's ratings were affirmed. The ratings reflect the
evaluation that the
bank is a strategic part of Group Martins, operating on an
integrated basis with
the main company of the group, Martins Comercio e Servicos de
(Martins; long-term national rating 'A(bra)'/ Outlook Stable).
factors in the strong operational integration and synergies
between these two
entities. The bank has contributed with around 40%-45% of the
The ratings also reflect its focus on the group's chain,
in its operating segment and healthy financial standing, based
profitability, comfortable capitalization level and prudent
management, in addition to a stable funding base, with adequate
A potential upgrade in BIB's IDRs would be contingent on a
diversification of its funding, product mix and an expansion of
that could reduce concentration on both the asset and liability
in a more robust profitability. Should BIB be able to reduce the
separates the bank from its peers in terms of performance and
jointly with an enhancement of its overall franchise, its
ratings could be
positively affected. Ratings could be negative affected by a
the bank's asset quality ratios, with a subsequent decline in
(operational ROAA below 1%) and a reduction in the bank's
position (FCC ratio below 13%).
The rating can be downgraded in case the FCC ratio declines to
less than 10% and
the institution continues to report losses. On the other hand,
the rating can be
upgraded in case BI&P reports more stable capitalization ratios
the generation of recurrent and sustainable operating results
and asset quality
under control (credit indicators between D-H equal or below 5%
of the total
The consistent improvement in performance (operating income /
above 1.3%) and the profile of the funding with reducing DPGEs,
since the bank
maintains the current indicators of asset quality,
capitalization and liquidity,
could raise the ratings. On the other hand, a further worsening
of the results,
coupled with the deterioration in credit quality and
capitalization (FCC ratio
below 12%), could lead to a rating downgrade.
Given the strong operating integration, the bank's ratings are
normally in line
with the rating of the commercial arm, which limits the
based on improved results or on Tribanco's expansion. Any
changes to Martins'
ratings can lead to similar changes to the bank's ratings.
Fitch has taken the following rating actions:
-- Foreign and Local Currency LT IDRs affirmed at 'BB-'; Outlook
-- Foreign and Local Currency Short-Term IDRs affirmed at 'B';
-- Viability Rating affirmed at 'bb-';
-- Long-Term National rating affirmed at 'A(bra)'; Outlook
-- Short-Term National rating affirmed at 'F1(bra)';
-- Support Rating affirmed at '5'.
-- Support rating Floor 'NF';
-- Long-Term National rating downgraded to 'BBB-(bra)' from
-- Short-Term National rating affirmed at 'F3(bra)'.
-- Long-Term National rating affirmed at 'A-(bra)'; Outlook
-- Short-Term National rating affirmed at 'F2(bra)' .
-- Long-Term National rating affirmed at 'A-(bra)`; Outlook
-- Short-Term National rating affirmed at 'F2(bra)' .
Primary Analyst (BI&P, Tribanco) and Secondary Analyst (BIB)
Fitch Ratings Brasil Ltda.
Alameda Santos, 700 - 7 andar - Cerqueira Cesar -Sao Paulo - SP
Primary Analyst (BIB) and Secondary Analyst (Sofisa and
Primary Analyst (Sofisa)
+55 11 4504-2604
Secondary Analyst (BI&P)
+55 21 4503-2626
Media Relations: Elizabeth Fogerty, New York, Tel: +1 (212) 908
Additional information is available at 'www.fitchratings.com'.
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