Meltdown? Banco Popular Placed on Credit Watch

I think that this is fallout

From the Baninter fiasco.
Look at it like this. Baninter has somehow lost RD$55 billion pesos somewhere. This reflects so poorly on the whole country--you me and everyone else connected with the DR-that S&P has lowered all the dominican issues to Watchneg.

The Banco Popular is closely identified with the PRD and just might have purchaseda bundle of thebonds, which inturn just might have an affect on the bank. However, the Grullon family is NOT like young Mr "Figuereo" as Golo calls him. They are very conservative and refrain from public exhibition of what they have, which is plenty.

While S&P are certainly trying to be on topof things, I think this is just a normal reaction against the disaster that happened at Baninter.

I do find it interesting that Jos? Le?n is thinking of pick up some of the pieces...After all, they own Banco Profesional....hummm


Hb

Edited to add: Pedro Silverio, now head of the economic think tank at my university has been warning of these consecuences for some time now. This could just be the kick in the pants that the government "Economic Team" (a.k.a. Chicago Black Sox?") needs to take the drastic actions needed to make some correction. Let us hope that this is the case, but with the PRD is is doubtful, there is too much internal pressures now.

Bank Ratings are Tied to Country Risk

If they downgrade the government debt then there cannot be corporate issuers , usually, unless they are subs fully guaranteed by a foreign parent, that earn a higher rating than the country itself.

They might like BP but it cannot exist higher than the DR. BB- is still barely investment grade.

What they said was

"Standard & Poor's Ratings Services said today that it placed its 'BB-' long-term local and foreign currency credit ratings and CD ratings on Banco Popular Dominicano C por A on CreditWatch with negative implications.

"The CreditWatch placement follows the rating actions taken on the sovereign credit rating of the Dominican Republic," said credit analyst David Olivares."

An even better explanation

Thanks Rick. I sorta knew that BP was pretty solid, but also had to figure that the country's rating had to be tied into the situation.

I saw where the DR ratings were changed at 2 pm and the BP rating at 4 pm.

HB

Hillbilly

Correction: The nickname I have given Ramon Baez Figueroa, which is my own creation is not "Figuereo", which is the last name for the infamous tricky-dick of taxi driver union syndicates Perez Figuereo. The nickname is "FIGUREO", which means in Dominican common language "show-off".

As for the conservatism of Banco Popular, I beg to differ. The next best thing to "Mr. Figureo" are the Grullons. Such is the hunger for exhibitionism by the Grullons, that during Pe?a Gomez*s heyday Alejandro Grullon was conducting a self-promotion campaign which led many to mention him as potential presidential candidate for the PRD party.

His son, the bank president is just that, a lucky heir. But he is all over the press and loves to have his picture taken everywhere he can. His extravagant Christmas show at the tower is a "Figueroaesque" production to keep their names in the press.

Banco Popular is not inmune to criticism in their ways. If you remember, I posted something that has not been printed or posted in any newspaper during the Pepegate, and that was that Banco Popular issued 10 credit cards to Pepegate each exceeding the $200,000 limit. That is a dangerous policy. Luckily enough, Pepe found Baninter*s "debt free- no fees-no late dues-no payment" terms much better than Banco Popular and he hardly used the BP credit cards and paid them on time. But why issue 10 credit cards to a human time bomb like this?

By the way, to those who said to me we had no financiers or thieves in DR who could crack the Fortune 500 list, let the Baninter list of who is who in $$$transactions be the guide. For instance, Luis Alvarez Renta used to qualify before this mess when he was a Washington lobbyist and international financier. His present $6 billion involvement with the Baninter case is no nickel and dime stuff. I heard today in a radio show that his wife is suing for divorce claiming $3 billion for her half of his fortune. He is getting hit legally from both sides.

Since I do not have Figureo to whip anymore and my campaign to make him famous in DR1 since his wedding paid off somehow(I jinxed him) my next subject is someone I cannot wait the light of day to see him in Najayo, and that is a famous show off who owns several casino and entertainment companies, who is being sought by Florida authorities along with a baseball team owner. I hope that if Hippo gets to see Bush, like it appears to be, Bush will finally ask Hippo to extradite these goons, who have gotten as much press and respect in society as Figureo himself. Both fear even going to the beach for fear the DEA will be sitting in a boat ready to snatch them. They have not travel for seven years outside of DR.

Except that compared to these two guys, Figureo is an angel. I even feel sorry for him now. Figureo has made a very long reservation for all inclusive Najayo Beach Resort. This is going to be a very long trial and his chances for bail are close to zero.
As of this writing, luxury facilities are being readied for a long term stay in Najayo. I understand there is a lot of shaking up in the "Special Cells" at Najayo, some of which are sold by inmates for as much as $300,000.

TW

We were told by a US credit agency person that:

"My understanding is that S&P's decision to put Banco Popular on CreditWatch negative was just something they do to the domestic banks' ratings automatically when the sovereign rating changes. I believe Popular is the only Dominican Bank that S&P covers."

What this means is that changing the credit rating on the country automatically will affect other entities being rated by S&P, regardless of how this bank is doing individually. Actually, personally I would think this bank, which is now by far the largest Dominican commercial bank, could have gained from the crisis in number of depositors.

My boo-boo GOLO

I "meant" Figureo, not the union guy.

Alejandro has been a PRD guy since he was 20 years old. Of course he was very close to Pe?a Pi?. HOwever,, dispite the fact that Manny is in the papers all the time at openings, I really don't see them as publicity hungry folks, But I could be wrong, since I don't live in that "ambience" , a little too rarified, if you please.

So now you go after Mon? and R. "T" H??? Man, they can't set foot outside of the DR or it's INTERPOL/DEA!! Well, Mon has his little toy to play with, so I guess he might be happy???

This is so much fun..

HB

Hillbilly

You are so funny...hahahah!

Listen, your buddy Alex Grullon today is trying to get some headlines by requesting audits for Baninter and making other statements. He would be wise to sit this out. People are too nervous about all banks, and the least we hear from them, the better.

I am now sitting in the edge with some certificates. I was thinking of pulling out and picking up Banco Central 28% notes, but Who can trust Mr. Malkum, the magician who has created the greatest fiction movie of all time. I am just as afraid of Banco Central as any other bank right now. Just think, their reserves are as low as our water dams. I may have more dollars in my pocket right now than Malkum in his BC safe. Someone suggested Bank Of Nova Scotia. But I know very little about those dudes. And Citibank? Hey they just moved all their operations from Kennedy Avenue to the Acropolis. I dont know how to read that. Plus the rent in that building is so high they may need to pay 30% interest on notes.

As for Mon, viejo mamon, he may be enjoying his little toy, but from what I hear, she covers her eyes when she sees that dicrepit wrinkled body and pot belly. She was really desperate or simply knows this guy will die soon.

TW

No problem

Hillbilly said:

Thanks Rick. I sorta knew that BP was pretty solid, but also had to figure that the country's rating had to be tied into the situation.

I saw where the DR ratings were changed at 2 pm and the BP rating at 4 pm.

HB

Click to expand...

I do this type of thing for a living. No corporate issuer could sensibly have a better rating that the soverign country itself, is the general principle. BB- is not great for a sovereign rating but gievn this fraud represents some gigantic % of the annual budget and is measurable even as a % of GNP it is staggering.