April 28, 2017 / 9:11 PM / in 8 months

Fitch Affirms Bantrab's IDRs at 'B+; Rating Watch Negative Removed

(The following statement was released by the rating agency) MONTERREY, April 28 (Fitch) Fitch Ratings has affirmed Banco de los Trabajadores' (Bantrab) Long-Term Issuer Default Ratings (IDRs) at 'B+'. Fitch has also affirmed the long-term National scale ratings of Bantrab and Financiera de los Trabajadores (Fintrab) at 'BBB(gtm)'. The ratings have been removed from Rating Watch Negative and assigned a Stable Outlook. A full list of rating actions follows at the end of this release. Bantrab's IDRs, Viability Rating (VR) and National ratings have all been affirmed as the entity has stabilized its correspondent banking relationships and moved to improve its corporate governance and a series of events that led to the arrest of various former executives and members of the Board of Directors by the Guatemalan authorities on charges of fraud, illicit associations and embezzlement to the detriment of the bank's shareholders in 2016. The ratings have been removed from Negative Watch and assigned a Stable Outlook as Fitch believes that Bantrab's sole correspondent bank relationship is sufficient to fulfil its obligations. Additionally, its funding and liquidity profile have recovered. Bantrab indicates that the next coupon payment, scheduled for May 15, 2017, has been transferred to fulfil its payment obligation as scheduled. In line with the rating actions on Bantrab, Fitch has affirmed Bantrab Senior Trust's (BST) IDR at 'B+'/RR4. Fitch believes the bank has the operational capacity to make future debt payments but will continue to monitor the evolution of Bantrab's relationship with more correspondent banks. Fitch affirmed Fintrab's National scale ratings since they are driven by support from Bantrab. KEY RATING DRIVERS IDRS, VR and NATIONAL RATINGS - Bantrab The bank is characterized by its stable funding structure, evolving corporate governance standards, high risk appetite, mainly reflected on its focus on segments of middle and low income customers, particularly in the Guatemalan public sector. The bank registers good loan quality indicators given the debt collection via automatic payroll deductions, and its capital position compares favourably with the industry average and its main competitors. Bantrab's profitability is good. This is based on a high net interest margin, acceptable operational efficiency and moderate loan loss provisions. SUPPORT RATING AND SUPPORT RATING FLOOR - Bantrab Bantrab's SR and SRF of '5' and 'NF', respectively, indicate that, although possible, external support cannot be relied upon given the currently low state ownership and limited systemic importance. IDR - Bantrab Senior Trust BST's seven-year U.S.-dollar loan participation notes' rating is in line with Bantrab's VR, reflecting that the senior unsecured obligations rank equally with the bank's unsecured and unsubordinated obligations. Bantrab's 'RR4' Recovery Rating reflects Fitch's expectations of an average recovery in the event of a default. National Scale Ratings - Fintrab Fintrab's National ratings are underpinned by institutional support it would likely receive from its shareholder, Bantrab. Fitch's opinion of the support is based on the high integration of the subsidiary with the parent and the significant reputational risk that a default would pose to Bantrab. As a result, Fintrab's National scale ratings are aligned with Bantrab's credit profile. RATING SENSITIVITIES IDRS, VR, RECOVERY RATING, NATIONAL RATINGS, SR AND SRF Fitch believes that the likelihood of a positive rating action is limited in the medium term. However, an upgrade could take place in the long term if Bantrab diversifies its funding sources, mainly by ensuring relationships with more correspondent banks, while maintaining its current profitability, asset quality and capitalization levels. On the other hand, while not Fitch's base case scenario, a substantial and sustained deterioration of the bank's credit portfolio quality that would affect operating profitability and lead to a material weakening in its capital position could trigger a downgrade. IDR - BST Changes in the notes' rating are contingent upon rating actions for Bantrab. National Ratings - Fintrab The National ratings of Fintrab subsidiaries would mirror changes in the National scale ratings of their parent. Fitch has taken the following rating actions: Banco de los Trabajadores: --Long-term Foreign Currency IDR affirmed at 'B+', Rating Outlook Stable assigned and Rating Watch Negative removed; --Short-term Foreign Currency IDR affirmed at 'B', Rating Watch Negative removed; --Local Currency Long-term IDR affirmed at 'B+', Rating Outlook Stable assigned and Rating Watch Negative removed; --Local currency Short-term IDR affirmed at 'B', Rating Watch Negative removed; --National Long-term Rating affirmed at 'BBB(gtm)', Rating Outlook Stable assigned and Rating Watch Negative removed; --National Short-term Rating affirmed at 'F3(gtm)', Rating Watch removed; --Viability Rating affirmed at 'b+', Rating Watch Negative removed; --Support Rating affirmed at '5'; --Support Rating Floor affirmed at 'NF'. Financiera de los Trabajadores, S.A. --Long-term national rating affirmed at 'BBB(gtm)', Rating Outlook Stable assigned and Rating Watch Negative removed; --Short-term national rating affirmed at 'F3(gtm)', Rating Watch Negative removed. Bantrab Senior Trust --Long-term foreign currency loan participation notes affirmed at 'B+/RR4',Rating Watch Negative removed Contact: Primary Analyst: Banco de los Trabajadores and Bantrab Senior Trust Secondary Analyst: Financiera de los Trabajadores Ricardo Aguilar ) Associate Director + 52 81 8399 9124 Av. Prol. Alfonso Reyes #2612, Piso 8 Edificio Connexity, Col. Del Paseo Residencial, Monterrey, Nuevo Leon 64920 Primary Analyst: Financiera de los Trabajadores Secondary Analyst: Banco de los Trabajadores and Bantrab Senior Trust Alvaro Castro Associate Director + 503 2516 6615 Committee Chairperson Theresa Paiz-Fredel Senior Director +1-212-908-0534 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 Global Bank Rating Criteria (pub. 25 Nov 2016) here Global Non-Bank Financial Institutions Rating Criteria (pub. 10 Mar 2017) here National Scale Ratings Criteria (pub. 07 Mar 2017) here Additional Disclosures Dodd-Frank Rating Information Disclosure Form here Solicitation Status here#solicitation Endorsement Policy here ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. 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