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Fitch Revises Rating Outlooks on BBVA and Santander Latam Subs' Ratings
November 12, 2013 / 8:17 PM / 4 years ago

Fitch Revises Rating Outlooks on BBVA and Santander Latam Subs' Ratings

(The following statement was released by the rating agency) NEW YORK, November 12 (Fitch) Fitch Ratings has revised the Rating Outlook to Stable from Negative and affirmed the ratings of some Latin American subsidiaries of Banco Bilbao Vizcaya Argentaria (BBVA) and Banco Santander, following the Nov. 8 affirmation of BBVA's and Santander's Issuer Default Ratings (IDRs) and Viability Rating (VR) which followed a similar rating action on the Sovereign. (For more information, see 'Fitch Affirms 8 Spanish Banks Following Sovereign Review', Nov. 8, 2013, available at www.fitchratings.com) A complete list of rating actions is included at the end of this press release. In Fitch's opinion, Latin America remains core to BBVA's and Santander's global business, as its key subsidiaries in the region (Chile, Colombia, Mexico, Panama and Peru) have generally maintained strong balance sheets and robust performances through the crisis and contributed on average about 25% of their profits since 2010. Both parents benefit from the geographic diversification of their Latin American subsidiaries, which give them the capacity to generate earnings internationally and make up for the softer results in Spain. BBVA's and Santander's subsidiaries in Latin America are generally self-funded and have generally boosted liquidity, maintained adequate capital and bolstered their contingent liquidity plans to cope with the eventual contagion from their parents' woes that would affect their access to funding. On the other hand, local regulators have ring-fenced these subsidiaries and proactively monitor their operations (liquidity, intercompany loans, dividend payouts) so as to minimize the probability of contagion. KEY RATING DRIVERS BBVA COLOMBIA SUPPORT AND ISSUER DEFAULT RATINGS BBVA Colombia's Support rating (SR) and IDRs were affirmed at '2' and 'BBB' respectively, and reflect the support it would receive from its parent, BBVA, given its growing strategic importance which is the result of its steady performance, high growth potential and growing contribution to BBVA's bottom line. The Outlooks on BBVA Colombia's long-term IDRs were revised to Stable from Negative, in line with that of its parent. BANCO SANTANDER CHILE (BSC) VIABILITY AND ISSUER DEFAULT RATINGS BSC's IDRs are driven by its VR of 'a+' and these do not factor in any extraordinary support from its parent, although it remains a strategically important subsidiary for Santander. The Outlooks on BSC's Long-term IDRs were revised to Stable from Negative, mirroring that of Santander's ratings. BSC's VR and IDRs reflect its market-leadership position and its strong franchise within Chile, whose economy continues to perform well. The ratings also reflect the bank's healthy asset quality, adequate profitability, albeit pressured in the last two years, adequate funding capital position and independent management. BSC's liquidity benefits from a sizeable, historically stable, and well-diversified retail deposit base. In addition, BSC has significantly reduced refinancing risk and exposure to more price-sensitive institutional deposits by growing core deposits and building a liquidity cushion while maintaining access to capital markets without any apparent rise in funding costs. BSC's stand-alone capital is adequate for its rating category and its liquidity position is strong, while its exposure to the Santander group is negligible and constrained by stringent local regulations. SUPPORT RATING AND SUPPORT RATING FLOORS Fitch has affirmed BSC's Support rating (SR) and SRF at '1' and 'A-', respectively. As the second largest bank in Chile, Fitch considers there to be an extremely high probability that the Chilean government (Fitch Foreign and Local Currency IDRs of 'A+'/'AA-'; Outlook Stable) will provide support, should it be required. RATING SENSITIVITIES BBVA COLOMBIA SUPPORT AND ISSUER DEFAULT RATINGS BBVA Colombia's ratings could be upgraded/downgraded in line with rating actions on the parent's IDRs, generally maintaining the current one-notch difference. Downward risk for BBVA Colombia's IDRs is limited by its intrinsic creditworthiness, as reflected in its VR of bbb-. BANCO SANTANDER CHILE VIABILITY AND ISSUER DEFAULT RATINGS Downward pressure for BSC's VR and IDRs could also arise from sustained pressure on profitability stemming from a further rise in loan loss provisions or from markedly lower liquidity or capitalization. More specifically, BSC's VR could be downgraded if its ROAA consistently remains below 1.3%, its Fitch Core Capital to Weighted Assets ratio falls and is maintained below 9%, together with asset quality deterioration and/or if the bank reduces its liquidity cushion significantly and it remains well below its current levels. There is limited upside potential in the near future for BSC's VR. SUPPORT RATING AND SUPPORT RATING FLOOR BSC's SR or SRF could only be affected by a downgrade of Chile's sovereign IDRs, which is considered unlikely at the present time. Fitch has taken the following rating actions: BBVA COLOMBIA --FC and LC long-term IDRs affirmed at 'BBB'; Outlook to Stable from Negative; --FC and LC short-term IDR affirmed at 'F2'; --Support Rating affirmed at '2'; --Viability rating unaffected. SANTANDER CHILE --FC and LC long-term IDRs affirmed at 'A+'; Outlook to Stable from Negative; --FC and LC short-term IDRs affirmed at 'F1'; --Viability rating affirmed at 'a+'; --Support rating affirmed at '1'; --SRF affirmed at 'A-'. Contact: Primary Analyst Diego Alcazar (BBVA Colombia, Banco Santander Chile) Director +1-212-908-0396 Fitch Ratings, Inc. One State Street Plaza New York, NY 10004 Secondary Analysts Andres Marquez (BBVA Colombia) Director +571 326 9999 Eduardo Santibanez (Banco Santander Chile) Senior Director +562-2499-3307 Committee Chairperson Theresa Paiz Fredel Senior Director +1-212-908-0534 Media Relations: 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: --'Global Financial Institutions Rating Criteria' (Aug. 15, 2012). Applicable Criteria and Related Research: Global Financial Institutions Rating 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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