Fitch: Banco BMG Rtgs Unaffected by Planned Sale of Loans to Banco Itau BMG Consignado S.A.

jueves 1 de mayo de 2014 11:23 GYT

(The following statement was released by the rating agency) NEW YORK, May 01 (Fitch) Fitch Ratings considers Banco BMG's (BMG; Long-Term Foreign Currency Issuer Default Rating 'B') potential sale of payroll-deductible loans to Banco Itau BMG Consignado (the joint venture, or JV) and the related increase in its ownership of the JV as neutral to BMG's ratings. On April 29, BMG announced an agreement with Itau Unibanco S.A. to increase BMG's ownership in the JV to 40% from the current 30% and unify the payroll loan business (consignado) of BMG with that of the JV, which means that nearly 84% of BMG's credit portfolio will be transferred during the remainder of 2014 into the JV. The increase in ownership was an option available to BMG within the original partnership agreement. Fitch views this announcement as having a neutral impact on the ratings in the short term, since after the approval expected in the third quarter, the sale of the affected loan portfolio is likely to be completed in the fourth quarter and growth of the revenues of the remaining businesses will take time to become relevant. The lower revenues resulting from a smaller loan portfolio on BMG's books will be offset in part by the larger equity in earnings from its increased shareholding in the JV. Fitch also believes that this plan bodes well for BMG as its profitability is expected to benefit from the expected lower funding and, especially, lower operating costs. Based on recent conversations with BMG's management, Fitch believes that BMG will not suffer any significant impact in terms of the restructuring costs. The successful business unification is also expected to improve BMG's liquidity and capital ratios. The transfer of the main payroll lending business will also give BMG's management time to focus on, and grow, its remaining businesses such as the consignado-backed credit card business and its commercial and used vehicle segments, which represented about 5%, 6.6%, and 4.6%, respectively, of the total credit portfolio as of Dec. 31, 2013. In addition to these existing business segments, BMG will focus on developing other products for cross-selling to its large customer base of nearly 6 million, developed mostly through its main payroll-lending product. Fitch recently upgraded BMG's viability rating to 'b' and the National long-term rating to 'BBB+(bra)' and also revised the Outlook to Positive from Stable for the Long-Term Foreign Currency IDR and National Long-Term rating. The upgrade reflects Fitch's expectation that recent improvements in the bank's Fitch Core Capital Ratio (FCC) and profitability were sustainable. The rating sensitivity stated that an increase in the FCC to over 7% (from 5% as of December 2014) could lead to a review of the ratings, which would also take into account other factors. With the expected deleveraging, BMG's management expects that its capital ratios will continue to strengthen and should result in a stronger FCC ratio. Fitch will be monitoring the results of this strategy on BMG's profitability and capitalization as the bank operates on a smaller scale. Contact: Primary Analyst Robert Stoll Director +1-212-908-9155 Fitch Ratings, Inc. 33 Whitehall Street New York, NY 10004 Secondary Analyst Claudio Gallina Director +55-11-4504-2216 Media Relations: Elizabeth Fogerty, New York, Tel: +1 (212) 908 0526, Email: Additional information is available at ''. ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.