Nueva Calificaciones de Bancos Dominicanos/New Ratings For Dominican Banks
Fitch Takes Rating Actions on Dominican Banks
NEW YORK--(BUSINESS WIRE)--June 17, 2003--Fitch Ratings, the international rating agency, has downgraded the ratings of banks in the Dominican Republic as indicated below. This action, affecting the ratings of all Dominican banks, is explained by the rapid deterioration of the operating environment, already under pressure from a slowing economy but further exacerbated by the intervention of Banco Intercontinental (BanInter, then the country's third largest bank) in April 2003, which highlights some shortcomings in bank oversight. Further manifestation of the deterioration of the operating environment was evident in deposit outflows from Bancredito (fourth largest bank), which, per recent statements made by the Central Bank, received material liquidity assistance to meet these outflows. While Fitch believes that these outflows do not reflect the banking system's underlying fundamentals, it is clear that the situation remains fragile, with slower economic growth, currency depreciation and volatility and inflationary pressures as a result of the Central Bank's liquidity injections into BanInter and Bancredito.
Our rating actions reflect concerns that the local market has reached a point of nervousness where there is the possibility that issues regarding particular banks could quickly escalate to a loss of confidence in the banking system and in the authorities' capacity to provide generalized support, should it become necessary. The Rating Watch Negative on the banks' individual ratings reflects our concern that any of the banks may prove vulnerable to quick shifts in market confidence.
The lower long-term ratings reflect concerns regarding the pressures placed on sovereign creditworthiness by the BanInter episode, and the potential that the banking system may require further support, which could add significantly to these pressures and leads Fitch to place the long-term ratings on Rating Watch Negative. The national ratings assigned by Fitch to a number of banks in the country have also been downgraded due to the deterioration of the banking system's credit quality relative to other sectors in the Dominican Republic. Should the operating environment show signs of sustained stability and the government succeeded in obtaining support from the international financial community, the Rating Watch Negative could be removed from the Individual and Long-Term ratings, as appropriate. On the other hand, should pressure on individual banks escalate to systemic deposit outflows, further downgrades could take place.
In the case of Bancredito, since, according to the authorities, the bank has required external support, the individual rating has been downgraded to 'E' from 'D'. This rating could potentially be subject to change once Fitch assesses that the bank's liquidity and capital have been brought to satisfactory levels and if the outflow of deposits has been stemmed. However, Bancredito's national and long-term foreign currency ratings incorporate the expectation that further support, if required, will continue to be provided until the potential acquisition is closed.
On June 12, 2003 the Governor of the Dominican Central Bank announced the deal struck by the owners of Bancredito pertaining to the sale of a 100% stake in the bank to the Leon Jimenes group, reputed to be among the strongest industrial groups in the country. This agreement comprises the sale to the Leon Jimenes group of the 100% stakes in the bank (the fourth largest in the country with c. 9% asset market share) and other subsidiaries of Grupo Bancredito, including the brokerage house (Acciones y Valores, the largest in the country), leasing company, loan workout company, credit card processing company (Bancredicard) and two off-shore banks in Panama (Bancredito Panama) and Cayman (Bancredit Cayman). Grupo Bancredito also owns Segna, the country's leading insurance company, which was left out of this deal.
The Pellerano family, majority shareholder in Grupo Bancredito, also has a majority stake in Tricom, the country's second largest telecom company and interests in newsmedia and free-zone operators, among others. The Leon Jimenes group is the largest industrial group in the Dominican Republic, with interests in the beverage and tobacco sectors, among others. The Leon Jimenes group owns a small bank, Banco Profesional, with an asset market share of slightly over 1%.
Banco Popular Dominicano
-- Long-term foreign currency to 'B' from 'BB-';
-- Rating Watch Negative;
-- Short-term foreign currency affirmed at 'B';
-- Individual affirmed at 'C/D' and placed on Rating Watch
Negative;
-- Support affirmed at '4T';
Banco BHD
-- Long-term foreign currency to 'B' from 'BB-';
-- Rating Watch Negative;
-- Short-term foreign currency affirmed at 'B';
-- Individual affirmed at 'D' and placed on Rating Watch Negative;
-- Support affirmed at '4T';
-- Long-term national rating to 'A(dom)' from 'A+(dom)';
-- Short-term national rating affirmed at 'F1(dom)'.
Bancredito
-- Long-term foreign currency to 'B' from 'BB-';
-- Rating Watch Negative;
-- Short-term foreign currency affirmed at 'B';
-- Individual downgraded to 'E' from 'D';
-- Support affirmed at '4T';
-- Long-term national rating to 'A(dom)' from 'A+(dom)';
-- Short-term national rating affirmed at 'F1(dom)'.
Banco Dominicano del Progreso
-- Long-term foreign currency to 'B-' from 'B+';
-- Rating Watch Negative;
-- Short-term foreign currency affirmed at 'B';
-- Individual affirmed at 'D' and placed on Rating Watch Negative;
-- Support affirmed at '5T';
-- Long-term national rating to 'A-'(dom)' from 'A(dom)';
-- Short-term national rating to 'F2(dom)' from 'F1(dom)'.
Banco Mercantil
-- Long-term foreign currency to 'B-' from 'B+';
-- Rating Watch Negative;
-- Short-term foreign currency affirmed at 'B';
-- Individual affirmed at 'D' and placed on Rating Watch Negative;
-- Support affirmed at '5T'.
Banco Intercontinental (BanInter)
-- Long-term foreign currency to 'B' from 'BB-';
-- Rating Watch Negative;
-- Short-term foreign currency affirmed at 'B';
-- Individual affirmed at 'E';
-- Support affirmed at '4T'.
CONTACT:
Fitch Ratings
Caracas:
Franklin Santarelli, +58-212-286-3356
Carlos Fiorillo, +58-212-286-3232
New York:
Gustavo Lopez, 212/908-0853
Peter Shaw 212/908-0553
Matt Burkhard, 212/908-0540 (Media Relations)
SOURCE: Fitch Ratings
Fitch Takes Rating Actions on Dominican Banks
NEW YORK--(BUSINESS WIRE)--June 17, 2003--Fitch Ratings, the international rating agency, has downgraded the ratings of banks in the Dominican Republic as indicated below. This action, affecting the ratings of all Dominican banks, is explained by the rapid deterioration of the operating environment, already under pressure from a slowing economy but further exacerbated by the intervention of Banco Intercontinental (BanInter, then the country's third largest bank) in April 2003, which highlights some shortcomings in bank oversight. Further manifestation of the deterioration of the operating environment was evident in deposit outflows from Bancredito (fourth largest bank), which, per recent statements made by the Central Bank, received material liquidity assistance to meet these outflows. While Fitch believes that these outflows do not reflect the banking system's underlying fundamentals, it is clear that the situation remains fragile, with slower economic growth, currency depreciation and volatility and inflationary pressures as a result of the Central Bank's liquidity injections into BanInter and Bancredito.
Our rating actions reflect concerns that the local market has reached a point of nervousness where there is the possibility that issues regarding particular banks could quickly escalate to a loss of confidence in the banking system and in the authorities' capacity to provide generalized support, should it become necessary. The Rating Watch Negative on the banks' individual ratings reflects our concern that any of the banks may prove vulnerable to quick shifts in market confidence.
The lower long-term ratings reflect concerns regarding the pressures placed on sovereign creditworthiness by the BanInter episode, and the potential that the banking system may require further support, which could add significantly to these pressures and leads Fitch to place the long-term ratings on Rating Watch Negative. The national ratings assigned by Fitch to a number of banks in the country have also been downgraded due to the deterioration of the banking system's credit quality relative to other sectors in the Dominican Republic. Should the operating environment show signs of sustained stability and the government succeeded in obtaining support from the international financial community, the Rating Watch Negative could be removed from the Individual and Long-Term ratings, as appropriate. On the other hand, should pressure on individual banks escalate to systemic deposit outflows, further downgrades could take place.
In the case of Bancredito, since, according to the authorities, the bank has required external support, the individual rating has been downgraded to 'E' from 'D'. This rating could potentially be subject to change once Fitch assesses that the bank's liquidity and capital have been brought to satisfactory levels and if the outflow of deposits has been stemmed. However, Bancredito's national and long-term foreign currency ratings incorporate the expectation that further support, if required, will continue to be provided until the potential acquisition is closed.
On June 12, 2003 the Governor of the Dominican Central Bank announced the deal struck by the owners of Bancredito pertaining to the sale of a 100% stake in the bank to the Leon Jimenes group, reputed to be among the strongest industrial groups in the country. This agreement comprises the sale to the Leon Jimenes group of the 100% stakes in the bank (the fourth largest in the country with c. 9% asset market share) and other subsidiaries of Grupo Bancredito, including the brokerage house (Acciones y Valores, the largest in the country), leasing company, loan workout company, credit card processing company (Bancredicard) and two off-shore banks in Panama (Bancredito Panama) and Cayman (Bancredit Cayman). Grupo Bancredito also owns Segna, the country's leading insurance company, which was left out of this deal.
The Pellerano family, majority shareholder in Grupo Bancredito, also has a majority stake in Tricom, the country's second largest telecom company and interests in newsmedia and free-zone operators, among others. The Leon Jimenes group is the largest industrial group in the Dominican Republic, with interests in the beverage and tobacco sectors, among others. The Leon Jimenes group owns a small bank, Banco Profesional, with an asset market share of slightly over 1%.
Banco Popular Dominicano
-- Long-term foreign currency to 'B' from 'BB-';
-- Rating Watch Negative;
-- Short-term foreign currency affirmed at 'B';
-- Individual affirmed at 'C/D' and placed on Rating Watch
Negative;
-- Support affirmed at '4T';
Banco BHD
-- Long-term foreign currency to 'B' from 'BB-';
-- Rating Watch Negative;
-- Short-term foreign currency affirmed at 'B';
-- Individual affirmed at 'D' and placed on Rating Watch Negative;
-- Support affirmed at '4T';
-- Long-term national rating to 'A(dom)' from 'A+(dom)';
-- Short-term national rating affirmed at 'F1(dom)'.
Bancredito
-- Long-term foreign currency to 'B' from 'BB-';
-- Rating Watch Negative;
-- Short-term foreign currency affirmed at 'B';
-- Individual downgraded to 'E' from 'D';
-- Support affirmed at '4T';
-- Long-term national rating to 'A(dom)' from 'A+(dom)';
-- Short-term national rating affirmed at 'F1(dom)'.
Banco Dominicano del Progreso
-- Long-term foreign currency to 'B-' from 'B+';
-- Rating Watch Negative;
-- Short-term foreign currency affirmed at 'B';
-- Individual affirmed at 'D' and placed on Rating Watch Negative;
-- Support affirmed at '5T';
-- Long-term national rating to 'A-'(dom)' from 'A(dom)';
-- Short-term national rating to 'F2(dom)' from 'F1(dom)'.
Banco Mercantil
-- Long-term foreign currency to 'B-' from 'B+';
-- Rating Watch Negative;
-- Short-term foreign currency affirmed at 'B';
-- Individual affirmed at 'D' and placed on Rating Watch Negative;
-- Support affirmed at '5T'.
Banco Intercontinental (BanInter)
-- Long-term foreign currency to 'B' from 'BB-';
-- Rating Watch Negative;
-- Short-term foreign currency affirmed at 'B';
-- Individual affirmed at 'E';
-- Support affirmed at '4T'.
CONTACT:
Fitch Ratings
Caracas:
Franklin Santarelli, +58-212-286-3356
Carlos Fiorillo, +58-212-286-3232
New York:
Gustavo Lopez, 212/908-0853
Peter Shaw 212/908-0553
Matt Burkhard, 212/908-0540 (Media Relations)
SOURCE: Fitch Ratings
Last edited: