Fitch Upgrades the Ratings of Venezuelan Banks.Business Editors NEW YORK/LONDON/CARACAS--(BUSINESS WIRE)--Aug. 29, 2003 Fitch Ratings Fitch Ratings An international rating agency for financial institutions, insurance companies, and corporate, sovereign, and municipal debt. Fitch Ratings has headquarters in New York and London and is wholly owned by FIMALAC of Paris. , the international rating agency, has upgraded the ratings of Venezuelan banks, as outlined below. The Rating Outlook has been changed to Stable from Negative. The Rating Watch Negative on the individual ratings has been lifted. This action indicates a relative improvement in the operating environment In computing, an operating environment is the environment in which users run programs, whether in a command line interface, such as in MS-DOS or the Unix shell, or in a graphical user interface, such as in the Macintosh operating system. for banks, as reflected in the June 23, 2003 upgrade of the Bolivarian Republic of Venezuela's long-term foreign currency rating to 'B-' (Outlook Stable) from 'CCC+' and its long-term local currency (Venezuelan Bolivar - VEB VEB In currencies, this is the abbreviation for the Venezuelan Bolivar. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. ) rating to 'B-' from 'CCC'. In addition, some other concerns relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc possible politically motivated mo·ti·vate tr.v. mo·ti·vat·ed, mo·ti·vat·ing, mo·ti·vates To provide with an incentive; move to action; impel. mo interference of the banking system, including but not limited to a distressed debt distressed debt Debt with low junk status and a market price substantially below par value, often pennies on the dollar. Investors sometimes buy distressed debt on the possibility that management can renegotiate loan agreements and keep the issuer out of exchange by the government, retaliatory re·tal·i·ate v. re·tal·i·at·ed, re·tal·i·at·ing, re·tal·i·ates v.intr. To return like for like, especially evil for evil. v.tr. To pay back (an injury) in kind. measures against institutions that supported the strike of early 2003, as well as directed lending and interest rate ceilings, have diminished di·min·ish v. di·min·ished, di·min·ish·ing, di·min·ish·es v.tr. 1. a. To make smaller or less or to cause to appear so. b. as these actions have not materialized. While voluntary domestic debt swaps Debt swap A set of transactions in which a firm buys a country's dollar bank debt at a discount and swaps this debt with the central bank for local currency that it can use to acquire local equity. Also called a debt-equity swap. and recent external bond repurchases have mitigated mit·i·gate v. mit·i·gat·ed, mit·i·gat·ing, mit·i·gates v.tr. To moderate (a quality or condition) in force or intensity; alleviate. See Synonyms at relieve. v.intr. To become milder. concerns about Venezuela's debt service willingness over the near term, the government's success in getting oil production back up to levels close to the ones achieved prior to the national strike earlier this year somewhat relieved public financing pressures. On the other hand, the foreign exchange controls so far appear to have had a limited impact on banks as these have continued to honour foreign exchange liabilities, which are mostly limited to letters of credit and correspondent banks Correspondent bank Bank that accepts deposits of, and performs services for, another bank (called a respondent bank); in most cases, the two banks are in different cities. , using pre-existing foreign currency assets. In this regard, it must be noted that banks have limited foreign currency exposures locally, as these are generally booked in branches and off-shore banks based in other countries (and therefore so far not subject to the controls). Bank depositors who wish to withdraw foreign currency deposits may freely do so although these have to be exchanged into VEB at the official exchange rate. Measures relating to minimum lending requirements to sectors such as micro-loans and agriculture have been in place for some time now although have thus far not had a sizeable negative impact on the system's asset quality. Measures relating to interest rate controls have not been implemented. In general, although the system's asset quality has witnessed some deterioration de·te·ri·o·ra·tion n. The process or condition of becoming worse. , this has been limited and most banks have ample loan loss reserve coverage, even when including restructured loans. On the other hand, despite the lack of foreign exchange gains, the high interest rate environment has resulted in large net interest revenue for most institutions, underpinning un·der·pin·ning n. 1. Material or masonry used to support a structure, such as a wall. 2. A support or foundation. Often used in the plural. 3. Informal The human legs. Often used in the plural. their overall profitability. Equity to assets and risk-weighted capital ratios at most banks continue to be ample, although this is justified given the volatile environment. Liquidity has been enhanced by the foreign exchange controls, as deposits have not been able to exit the country and banks have been unable to on-lend these deposits due to the economic contraction An economic contraction is a reduction in goods and services for sale in the market place. Typically it relates to a downturn in production caused by external factors such as weather or a decline in exports, or by such internal factors as taxes, regulatory constraints or other . A large proportion of excess liquidity has thus been placed in short-term CDs issued by the Central Bank. While Fitch acknowledges the improvement in the operating environment for financial institutions, there are still many potential threats that could undermine the health of the financial system. The detailed credit analysis of each of the institutions in the following list will be published in due course. Banco del Caribe -- Long-term foreign currency upgraded to 'B-' from 'CCC-'; -- Outlook Stable; -- Short-term foreign currency upgraded to 'B' from 'C'; -- Long-term local currency upgraded to 'B-' from 'CCC-'; -- Short-term local currency upgraded to 'B' from 'C'; -- Individual upgraded to 'D' from 'D/E'; -- Support affirmed af·firm v. af·firmed, af·firm·ing, af·firms v.tr. 1. To declare positively or firmly; maintain to be true. 2. To support or uphold the validity of; confirm. v.intr. at '5'. Banco Exterior -- Long-term foreign currency upgraded to 'B-' from 'CCC-'; -- Outlook Stable; -- Short-term foreign currency upgraded to 'B' from 'C'; -- Long-term local currency upgraded to 'B-' from 'CCC-'; -- Short-term local currency upgraded to 'B' from 'C'; -- Individual upgraded to 'D' from 'D/E'; -- Support affirmed at '5'. Banco Mercantil -- Long-term foreign currency upgraded to 'B-' from 'CCC-'; -- Outlook Stable; -- Short-term foreign currency upgraded to 'B' from 'C'; -- Long-term local currency upgraded to 'B-' from 'CCC-'; -- Short-term local currency upgraded to 'B' from 'C'; -- Individual upgraded to 'D' from 'D/E'; -- Support affirmed at '5'. Banco Occidental oc·ci·den·tal or Oc·ci·den·tal adj. Of or relating to the countries of the Occident or their peoples or cultures; western. n. A native or inhabitant of an Occidental country; a westerner. Noun 1. de Descuento -- Long-term foreign currency upgraded to 'CCC+' from 'CCC-'; -- Outlook Stable; -- Short-term foreign currency affirmed at 'C'; -- Long-term local currency upgraded to 'CCC+' from 'CCC-'; -- Short-term local currency affirmed at 'C'; -- Individual affirmed at 'D/E'; -- Support affirmed at '5'. Banco Provincial -- Long-term foreign currency upgraded to 'B-' from 'CCC-'; -- Outlook Stable; -- Short-term foreign currency upgraded to 'B' from 'C'; -- Long-term local currency upgraded to 'B-' from 'CCC-'; -- Short-term local currency upgraded to 'B' from 'C'; -- Individual upgraded to 'D' from 'D/E'; -- Support affirmed at '5'. Banco de Venezuela -- Long-term foreign currency upgraded to 'B-' from 'CCC-'; -- Outlook Stable; -- Short-term foreign currency upgraded to 'B' from 'C'; -- Long-term local currency upgraded to 'B-' from 'CCC-'; -- Short-term local currency upgraded to 'B' from 'C'; -- Individual upgraded to 'D' from 'D/E'; -- Support affirmed at '5'. Banesco Banco Universal -- Long-term foreign currency upgraded to 'CCC+' from 'CCC-'; -- Outlook Stable; -- Short-term foreign currency affirmed at 'C'; -- Individual affirmed at 'D/E'; -- Support affirmed at '5'. Banco Venezolano de Credito -- Long-term foreign currency upgraded to 'B-' from 'CCC-'; -- Outlook Stable; -- Short-term foreign currency upgraded to 'B' from 'C'; -- Long-term local currency upgraded to 'B-' from 'CCC-'; -- Short-term local currency upgraded to 'B' from 'C'; -- Individual upgraded to 'D' from 'D/E'; -- Support affirmed at '5'. |
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