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Fitch Upgrades Support Ratings of Santander Central Hispano's Brazil Subsidiaries.

SAO PAULO, Brazil -- Fitch Ratings, the international rating agency, has upgraded the support rating of Banco Santander Central Hispano (SAN)'s subsidiaries in Brazil as follows:

Banco do Estado de Sao Paulo S.A. (Banespa)

--Support to '3' from '4'.

Banco Santander Brasil S.A. (BSB)

--Support to '3' from '4'.

Banco Santander Meridional S.A. (BSM)

--Support to '3' from '4'.

All other ratings of the banks were affirmed by Fitch. A complete list of ratings actions are listed below.

The upgrade of the support rating is based on the recognition of the importance of the Brazilian operations to the parent, as well as of the improving operating environment in Brazil, which reduces possible sovereign constraints to the parent's willingness to provide support.

In Brazil, SAN operates through three principal banks: Banespa, BSB and BSM. These are separate legal entities, but in practice function as a multiple bank and consolidate on a pro-forma basis into a group known as Santander Banespa (SB), with unified management, strategies, systems, and controls. Although SB is not a legal entity, Fitch evaluates the group on a pro-forma consolidated basis and makes no distinctions between the long term ratings of these banks. Brazilian regulatory supervision focuses on the 'consolidated' SB.

Their foreign currency ratings are at Brazil's country ceiling. National ratings, as well as the local currency long-term rating higher than Brazil's country rating, reflect shareholder strength and the strategic importance of the Brazilian operation to SAN, as well as Fitch's conviction that SAN is fully committed to developing SB's competitive advantages. Banespa's individual rating is higher than BSB's and BSM's as it reflects a strong and evolving franchise in Brazil's most prosperous region, which is tempered by a high yet rapidly declining volume of intangibles carried on balance sheet. BSB's individual rating reflects the high volume of intangibles carried on balance sheet and a still relatively weak -- albeit improving -- operating performance. BSM's individual rating reflects its weak operating performance with little prospect of improvement. These individual ratings are strengthened by SAN's franchise and the group's risk management and technological support.

The specific rating actions taken today are outlined below:

Banco do Estado de Sao Paulo S.A.

--Support rating upgraded to '3' from '4';

--Individual rating affirmed at 'C';

--Long-term foreign currency rating affirmed at 'BB-';

--Long-term local currency rating affirmed at 'BB+';

--Short-term foreign and local currency ratings affirmed at 'B';

--Long-term national rating affirmed at 'AA(bra)';

--Short-term national rating affirmed at 'F1+(bra)'.

Banco Santander Brasil S.A.

--Support rating upgraded to '3' from '4';

--Individual rating affirmed at 'C/D';

--Long-term foreign currency rating affirmed at 'BB-';

--Long-term local currency rating affirmed at 'BB+';

--Short-term foreign and local currency ratings affirmed at 'B';

--Long-term national rating affirmed at 'AA(bra)';

--Short-term national rating affirmed at 'F1+(bra)'.

Banco Santander Meridional S.A.

--Support rating upgraded to '3' from '4';

--Individual rating affirmed at 'D';

--Long-term foreign currency rating affirmed at 'BB-';

--Long-term local currency rating affirmed at 'BB+';

--Short-term foreign and local currency ratings affirmed at 'B';

--Long-term national rating affirmed at 'AA(bra)';

--Short-term national rating affirmed at 'F1+(bra)'.

The Rating Outlook is Stable for all long-term ratings.

SAN is Spain's largest banking group (end-2004 assets: USD776bn). It currently holds around 10% of the Latin American commercial banking market, which generates about a third of SAN's pre-tax profits. Brazil has the largest population in Latin America and the second largest GDP, which renders it of key importance to SAN's strategy for the region. SB has the fifth largest loan portfolio and core deposit base among private banks in Brazil.

Note to Editors:

Fitch support and individual ratings for banks: Fitch's Individual ratings assess how a bank would be viewed if it were entirely independent and could not rely on external support. Its support ratings for banks deal with the question of whether a bank would receive support from its owners or from the state if it were to get into difficulty. These ratings are not debt ratings but rather, respectively, an assessment of the intrinsic strength of a bank and of any level of outside support that may, or may not, be available to it.

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.
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Publication:Business Wire
Date:Jun 2, 2005
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