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Fitch Revises Outlook on Banco Societe Generale Brasil and Subs' LC IDRs to Negative
April 2, 2014 / 6:02 PM / in 4 years

Fitch Revises Outlook on Banco Societe Generale Brasil and Subs' LC IDRs to Negative

(The following statement was released by the rating agency) RIO DE JANEIRO/NEW YORK, April 02 (Fitch) Fitch Ratings has affirmed the local-currency (LC) and foreign-currency (FC) Issuer Default Ratings (IDRs) and National ratings of Banco Societe Generale Brasil S.A. (SGBr) and its two wholly-owned subsidiaries, Banco Cacique S.A. (Cacique) and Banco Pecunia S.A. (Pecunia). At the same time, the agency has revised its Outlook on the LC long-term (LT) IDRs of all three banks to Negative. All the remaining Rating Outlooks remain Stable. A full list of rating actions can be found at the end of this release. KEY RATING DRIVERS This action follows the recent rating action on the parent of the three banks, Societe Generale (SG; LT IDR 'A'/Outlook Negative), whose details can be found in the press release 'Fitch Revises Societe Generale's Outlook to Negative on Support Expectations; Affirms at 'A'', published on March 26, 2014, available at 'www.fitchratings.com'. The ratings of the three Brazilian banks are based on support from SG. Their LC LT IDRs are maintained one notch below SG's IDR, while the Outlooks on these ratings are aligned with that on SG's IDR, as per Fitch's criteria, "Rating FI Subsidiaries and Holding Companies". The revision in the Outlook on the LC LT IDRs to Negative directly mirrors the action on the Outlook on SG's IDR, and reflects the maintenance of the one-notch difference. The banks' FC LT IDRs are constrained by Brazil's country ceiling ('BBB+') and remain two notches below SG's IDR; therefore they are unaffected by the rating action. Fitch considers SGBr as a strategically important subsidiary of SG, given their common branding, the unquestioned support from the parent as evidenced by the capital injections in recent years, high proportion of parental non-equity funding, strong operational synergies, and high level of managerial and commercial integration with SG. Fitch considers Cacique and Pecunia as subsidiaries of limited importance for SG, as their contribution to the group's results has been minimal and is unlikely to increase in the near future (considering their small franchise), and as there are limited synergies between the banks and parent. Fitch equalizes Cacique and Pecunia's ratings with SGBr's ratings, as it recognizes that SG's support to Cacique and Pecunia also has been unquestioned, as evidenced by the timely capital injections in 2011 and 2012, the high proportion of parental non-equity funding, and the high managerial integration. Considering the relatively low cost of potential support, Fitch does not expect a change in this stance. Furthermore, the agency views SGBr and its subsidiaries as a group; thus, it does not differentiate the ratings of the three banks. The banks' Support Rating of '2' reflects Fitch's belief that the probability of support by SG, in case of need, would be high. Fitch does not assign a Viability Rating to any of the three banks, due to their significant reliance on parental support and relatively small franchises. RATING SENSITIVITIES Positive rating drivers: A Brazilian sovereign rating upgrade or change in its Rating Outlook could lead to a similar change in the FC IDRs of all three banks, which are currently limited by the country ceiling. An upgrade of SG's rating would not have an effect on the ratings, as long as the sovereign rating remains unchanged. A positive change in the Outlook of SG's rating would be mirrored in the Outlook of the three banks' LC LT IDRs. Negative rating drivers: A Brazilian sovereign rating downgrade or change in its Outlook could lead to a similar change in the ratings of all three banks. A one-notch downgrade of SG's IDR would lead to a downgrade of the LC IDRs of the Brazilian subsidiaries, while a more than one-notch downgrade of SG's IDR would affect both the LC and FC IDRs. The banks' National Ratings may be affected by a multi-notch downgrade of the parent. In addition, a change in Fitch's evaluation of the strategic importance of the three banks for SG could result in changes to their ratings. Fitch has affirmed the following ratings and revised Outlooks as shown: SGBr: --FC LT IDR at 'BBB+', Outlook Stable; --LC LT IDR at 'A-', Outlook revised to Negative from Stable; --FC Short-term (ST) IDR at 'F2'; --LC ST IDR at 'F1'; --Support Rating at '2'; --National Long-term rating at 'AAA(bra)', Outlook Stable; --National ST rating at 'F1+(bra)'. Cacique: --FC LT IDR at 'BBB+', Outlook Stable; --LC LT IDR at 'A-', Outlook revised to Negative from Stable; --FC ST IDR at 'F2'; --LC ST IDR at 'F1'; --Support Rating at '2'; --National LT rating at 'AAA(bra)', Outlook Stable; --National ST rating at 'F1+(bra)'. Pecunia: --FC LT IDR at 'BBB+', Outlook Stable; --LC LT IDR at 'A-', Outlook revised to Negative from Stable; --FC ST IDR at 'F2'; --LC ST IDR at 'F1'; --Support Rating at '2'; --National LT rating at 'AAA(bra)', Outlook Stable; --National ST rating at 'F1+(bra)'. Contact: Primary Analyst Esin Celasun Director +55 21 4503 2626 Fitch Ratings Brasil Ltda. Praca XV de Novembro, 20 - 401 B Rio de Janeiro, RJ, Brasil Secondary Analyst Robert Stoll Director +1 212 908 9155 Committee Chairperson Franklin Santarelli Managing Director +1 212 908 0739 Media Relations: Jaqueline Carvalho, Rio de Janeiro, Tel: +55 21 4503 2623, Email: jaqueline.carvalho@fitchratings.com; Elizabeth Fogerty, New York, Tel: +1 (212) 908 0526, Email: elizabeth.fogerty@fitchratings.com. Additional information is available at 'www.fitchratings.com'. Applicable Criteria and Related Research: -- National Scale Ratings Criteria (Oct. 30, 2013); -- Rating FI Subsidiaries and Holding Companies (Aug. 10, 2012); -- Global Financial Institutions Rating Criteria (Jan. 31, 2014); -- Fitch Affirms Ratings of Banco Societe Generale Brasil, Banco Cacique and Banco Pecunia, (March 19, 2014). Applicable Criteria and Related Research: Global Financial Institutions Rating Criteria here Rating FI Subsidiaries and Holding Companies here National Scale Ratings Criteria 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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