-- On Dec. 18, Puerto Rico-based regional banking company Oriental
Financial Group announced that it had completed its acquisition of Banco
Bilbao Vizcaya Argentaria Puerto Rico.
-- We are keeping our ratings on Oriental, including the 'BB+'
counterparty credit rating, on CreditWatch with negative implications.
-- We expect to resolve the CreditWatch listing based on our assessment
of the pro forma capital structure, interim financial results, and our updated
On Dec. 21, 2012, Standard & Poor's Ratings Services kept its 'BB+'
counterparty credit rating on Puerto Rico-based regional banking company
Oriental Financial Group on CreditWatch with negative implications. Following
the acquisition, $50 million of subordinated notes issued by BBVA PR are now
obligations of Oriental Bank & Trust.
The CreditWatch action follows Oriental's announcement that it has completed
its previously announced acquisition of the Puerto Rico-based operations of
Banco Bilbao Vizcaya Argentaria S.A. (BBVA S.A.). These consist of all of the
outstanding common stock of BBVAPR Holding Corp. (the sole shareholder of
Banco Bilbao Vizcaya Argentaria Puerto Rico (BBVA PR), a Puerto Rico-chartered
commercial bank, and BBVA Seguros Inc., a subsidiary offering insurance
services) and BBVA Securities of Puerto Rico Inc., a registered broker-dealer,
for $500 million in cash. Immediately following the closing of the
acquisition, BBVA PR merged into Oriental Bank & Trust, a wholly owned
subsidiary of Oriental, with Oriental Bank continuing as the surviving entity.
We expect that Oriental will be able to successfully integrate BBVA PR given
its knowledge of the local market, similar geographic footprint, and
experience integrating Eurobank, which it acquired in 2010 in a Federal
Deposit Insurance Corp.-supported transaction. We will evaluate the ultimate
business and financial profiles of the combined entity, as well as interim
financial results, to update the rating on the company. We will also evaluate
Oriental's plans regarding the integration, branding, advertising, and
marketing of the combined companies. We could affirm the rating on Oriental or
lower it by no more than two notches to 'BB-', based on the results of our
assessment of the pro forma capital structure, interim financial results, and
our updated financial projections.
Ratings Score Snapshot
Bank Holding Company Rating BB+/Watch Neg/--
Issuer Credit Rating BBB-/Watch Neg/--
Business Position Weak (-2)
Capital and Earnings Very Strong (+2)
Risk Position Moderate (-1)
Funding and Liquidity Below Average
and Adequate (-1)
GRE Support 0
Group Support 0
Sovereign Support 0
Additional Factors 0