Fitch Ratings has assigned Banco BMG S.A.'s (BMG) international ratings as follows:
--Long-term foreign currency Issuer Default Rating (IDR) 'BB-'; Outlook Stable;
--Long-term local currency IDR 'BB-'; Outlook Stable;
--Short-term foreign currency IDR 'B';
--Short-term local currency IDR 'B';
--Individual rating 'D'
--Support Floor 'no floor'.
BMG's other ratings have been affirmed as follows:
--National Long-term rating 'A-(bra)'; Outlook Stable,
--National Short-term rating 'F2(bra)';
--Support rating '5'.
BMG's IDRs are driven by its Individual rating, which reflects the bank's strong franchise in its product niche, lending against public sector payrolls and Social Security (INSS) payments, which has generated consistent profitability and generally good asset quality. At the same time, however, the bank's dependence on one product concentrates revenue generation and vulnerability to external factors which could affect profitability and loan origination. The bank is also dependent on relatively few institutional funding sources. These concentrations constrain its Individual rating.
Fitch has also assigned an expected long-term foreign currency rating of 'B(exp)' to BMG's upcoming issuance of subordinated fixed rated notes due 2019. The expected rating of the subordinated notes is notched two notches below the bank's long-term local currency IDR of 'BB-'. The notching of the issue below the bank's IDRs reflects the issue's subordinated status. The final rating for the notes is contingent on the receipt of final documentation conforming to information already received.
The securities, which are subject to approval from Brazil's Central Bank to be treated as Tier II instruments for regulatory capital purposes, will likely be considered as Fitch's class D securities and receive 75% equity-credit under the agency's guidelines regarding its capital assessment approach, reflecting their high loss absorption capacity. BMG has historically maintained capitalization ratios in line with local guidelines. The proceeds arising from the subordinated issue will be used to both strengthen its total capitalization ratio in the form of Tier II to allow for additional growth of its loan operations, as well as to ease the impact of new accounting requirements related to loan assignment expected for January 2010.
Eligible hybrids and other capital securities (equity-like instruments) can represent only 30% of Fitch's eligible capital, which is defined as core capital plus eligible hybrid debt and other capital securities.
BMG has its origins back in 1930 and is owned by Mr. Flavio Pentagna Guimaraes and his family, which directly and indirectly control approximately 98.9% of total voting shares. The Guimaraes family also have interests in real state, agribusiness and food processing.
Additional information is available at 'www.fitchratings.com'.
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Fitch Ratings
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Maria Laura
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or
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