Fitch Affirms Banco ABC Brasil S.A.'s Ratings

LONDON & NEW YORK & SAO PAULO--(Business Wire)--
Fitch Ratings has affirmed the following ratings of Banco ABC Brasil S.A.
(ABCBr):

-- Long-term foreign currency Issuer Default rating (IDR) at 'BB+'; Outlook
Stable;

-- Short-term foreign currency IDR at 'B';

-- Long-term local currency IDR at 'BB+'; Outlook Stable;

-- Short-term local currency IDR at 'B';

-- Individual rating at 'C/D';

-- Support rating at '3';

-- National long-term rating at 'AA-(bra)'; Outlook Stable;

-- National short-term rating at 'F1+(bra)';

The foreign and local currency IDRs, and National ratings of ABCBr are based on
the operational and financial support of its parent, Arab Banking Corporation
(ABC; IDR 'BBB+' with a Stable Outlook by Fitch). ABC's support of ABCBr has
recently been demonstrated by liquidity assistance extended to the Brazilian
operation during the height of the liquidity strain in local and international
markets in fourth quarter-2008 (4Q'08); in spite of this, ABCBr is not part of
its parent bank's core operations and, as such, not strategic to its operations.
Fitch is comfortable that the parent will work to preserve the value of ABCBr in
the near and medium term, but the reduction of its stake from 86% to 54% in the
wake of the 2007 IPO, and the parent bank's renewed focus on its domestic
operations make it clear that the Brazilian operation is not a key part of its
parent's long-term strategy. As a result, Fitch believes that the probability of
support is moderate, as evidenced by the '3' Support rating.

The Individual rating reflects the bank's historically adequate asset quality,
expertise in its main business segments, adequate capitalization ratios and a
strategy consistent with the macroeconomic scenario. However, the ratings also
consider the fact that ABCBr is modestly sized with little diversification,
relative asset and liability concentration, and profitability below that of its
peers; asset quality is under pressure, and this translates to pressure on
profitability which should continue for the at least the near term.

Due to the global financial crisis and its effects on the Brazilian
macroeconomic environment, ABCbr has put on hold its medium-term growth goals.
The expansion of its branches and personnel has been suspended and asset volume
reduced since 3Q'08. Asset quality, historically good, has been affected by the
gradual migration of the portfolio to longer past-due risk categories, in line
with its main competitors. As a result, ABCBr has registered a significant
increase in its provisions, putting pressure on its earnings. To diversify its
portfolio and increase profitability, ABCBr has emphasized development of the
middle-market segment, which is modest at present. That strategy, despite being
closely monitored by the bank, could put pressure on asset quality and occasion
significant additional provisions.

As a foreign bank, ABCBr has relatively easy access to foreign financing with
longer tenors and lower costs. As a result of the turbulent financial
environment, however, ABCbr's financing from this source has declined, due to
its higher prices. Although the bank has an ample source of time deposits, its
growth will depend on its success in broadening its funding base. The liquidity
crisis that affected Brazilian banks led the head office to double its lines to
ABCBr, strengthening its commitment to its Brazilian subsidiary.

ABCBr, established in 1989, is controlled by ABC (equity of USD2 billion at
FYE08) through Marsau Uruguay Holdings. The bank operates mainly in lending to
medium-sized and large companies.

Fitch's national ratings provide a relative measure of creditworthiness for
rated entities in countries where the sovereign's foreign and local currency
ratings are below 'AAA'. National ratings are not internationally comparable
since the best relative risk within a country is rated 'AAA' and other credits
are rated only relative to this risk. They are signified by the addition of an
identifier, for the country concerned, such as 'AAA (bra)' for national ratings
in Brazil.

Fitch's rating definitions and the terms of use of such ratings are available on
the agency's public site, 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 Ratings
Rogerio Santos and Edgard Dias, +5511-4504-2600
(Sao Paulo)
Media Relations:
Brian Bertsch, +1-212-908-0549 (New York)
brian.bertsch@fitchratings.com
Cindy Stoller, +1-212-908-0526 (New York)
cindy.stoller@fitchratings.com

Copyright Business Wire 2009