SAO PAULO, July 27 (Reuters) - Fitch Ratings is no longer considering an upgrade to the credit ratings of Brazil’s investment bank Grupo BTG Pactual SA due to a “significant deterioration” in the country’s operating environment.
Fitch affirmed on Monday the BBB-minus rating of BTG Pactual and revised to stable from positive the outlook on that rating, which means it is not planning to change it in the short- to medium-term.
The ratings firm had assigned a positive rating outlook on BTG Pactual after it acquired BSI SA, a private bank headquartered in Switzerland, in 2014.
“While Fitch expects this transaction to bring sizable and stable fee revenue to the bank ... the current operating environment hinders the expected benefits that the integration of the BSI acquisition could provide,” Fitch analyst Eduardo Ribas said in a report.
Reaping such integration benefits should take longer than the normal time frame implied by a positive outlook, Fitch said, adding that Brazil’s operating environment is not expected to improve until late 2016.
A positive outlook usually signals a rating could be upgraded in 12-18 months.
Fitch noted that BTG Pactual’s loan impairment charges increased significantly last year and during the first quarter of 2015. Those charges could consume a “significant portion” of the bank’s net income, the agency said. (Reporting by Walter Brandimarte; Editing by David Gregorio)