December 10, 2014 / 8:47 PM / 5 years ago

Fitch: Banrural's Ratings Unaffected by Banco Procredit Honduras Acquisition

(The following statement was released by the rating agency) SAN SALVADOR, December 10 (Fitch) The ratings and Outlook for Banco de Desarrollo Rural, S.A.'s (Banrural) are unaffected by its recent acquisition of Banco ProCredit Honduras, S.A (ProCredit), now Banco de Desarrollo Rural Honduras, S.A.(Banrural Honduras), according to Fitch Ratings. A complete list of Banrural's ratings follows at the end of this press release. Transaction Details Banrural and its subsidiary, Aseguradora Rural, acquired a complete stake in the Honduran bank, ProCredit in November 2014, with the insurance company participating with an equity holding of less than 1%. According to the new shareholder, the acquisition was followed by a complete change in the board of directors. Procredit has adopted the new owner's name and brand by changing its name to Banrural Honduras. The new subsidiary will also receive a USD 5 million capital injection, required to fulfill the Honduran minimum capital requirement. According to Fitch's estimates, both the cash payment and the goodwill generated by the transaction have a very limited impact (less than 50 basis points) on Banrural's liquidity coverage of liabilities and Fitch core capital figures. In Fitch's opinion, Banrural's figures are solid and consistent with its rating category, and any impact on capital metrics will be promptly compensated by Banrural's consistent profitability and capital generation capacity. Expected Changes According to the Fitch's forecast of Banrural's consolidated figures after the transaction, variations in Banrural's current financial profile are minimal. The relative small size of the acquired bank diminishes the impact of its weak financial performance and lower asset quality on Banrural's credit profile. At this point, Fitch has not considered any benefit from geographic diversification, given the relatively small size of the acquired operation and the more challenging operating environment that prevails in Honduras. Banrural Honduras's assets account for 1.4% of Banrural. Banrural Honduras has limited market share and franchise in Honduras; however, its orientation to micro small and medium enterprise financing using local deposits as its main funding source is resembles Banrural's business model; however, Banrural Honduras's high deposit concentration differs from Banrural's atomized funding structure. Fitch's current ratings for Banrural are as follows: Banco de Desarrollo Rural: --Long Term Issuer Default Rating 'BB'; Outlook Stable; --Short Term Issuer Default Rating 'B'; --Local Currency Long-term IDR 'BB'; Outlook Stable; --Local Currency Short-term Issuer Default Rating 'B'; --Viability Rating 'bb'; --Support Rating '3'; --Support Rating Floor 'BB-'; --National Long-term Rating 'AA+(gtm)'; Outlook Stable; --National Short-term Rating 'F1+(gtm)'. Contact: Primary Analyst Mark Narron Director +1-212-612-7898 Fitch Ratings, Inc. 33 Whitehall Street New York, NY 10004 Secondary Analyst Marcela Galicia Director +503 2516 6616 Media Relations: Elizabeth Fogerty, New York, Tel: +1 (212) 908 0526, Email: elizabeth.fogerty@fitchratings.com. Additional information is available on www.fitchratings.com Applicable Criteria and Related Research: --'Fitch Downgrades Banrural's IDR to 'BB' following Downgrade of Guatemala'(Jun. 27, 2014) --'Global Financial Institutions Rating Criteria' (Jan. 31, 2014); --'National Scale Ratings Criteria' (Oct. 30, 2014); --'Guatemala' (June 24, 2014). Applicable Criteria and Related Research: Global Financial Institutions Rating Criteria here National Scale Ratings Criteria 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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