June 22, 2017 / 8:54 PM / a year ago

Fitch Affirms Viter's Investment Management Quality Rating of 'Strong'

(The following statement was released by the rating agency) SAO PAULO, June 22 (Fitch) Fitch Ratings has affirmed the Investment Management Quality Rating Viter Vice-Presidencia de Gestao de Ativos de Terceiros da Caixa (Viter) at 'Strong'. The Rating Outlook is Stable. KEY RATING DRIVERS The 'Strong' rating assigned to Viter reflects Fitch's opinion that the investment manager has strong investment capabilities and operational characteristics. Viter's rating factors in that the asset manager is part of a financial conglomerate, Caixa Economica Federal (Caixa, IDRs 'BB'/Negative; Long-term National rating 'AA+(bra)'/Stable). The rating also reflects the firm's conservative approach, broad client base and distribution channels, in addition to a well-disciplined investment process, concentrated on traditional fixed income funds. The rating further considers its strong revenue generation and strong set of internal controls, along with the robust liquidity and market risk management structure. The asset manager rating considers only the firm's activities in the local market, including the portfolio under management of unrestricted funds from the Unemployment Guarantee Fund (Fundo de Garantia por Tempo de Servico). The rating excludes the management of structured funds, such as credit receivable investment funds (FIDCs) and private equity investment funds (FIPs), which have their own processes and policies and are segregated from the management of traditional funds. Viter's main challenges are improving efficiency, to complete the ongoing projects in technology and automation, further develop the capabilities of its teams and continue to develop more sophisticated and higher value-added strategies. The 'Strong' rating is based on the following assessments: Investment Process: Excellent Investment Resources: Strong Risk Management: Strong Investment Performance: Consistent Company & Client Servicing: Excellent Created in 1998, Viter is responsible for Caixa's third-party asset management. It ranks as the fourth-largest asset manager in Brazil, with 7% market participation in the local market and AUM of BRL250 billion, not taking into account the structured funds, according to the Brazilian Association of Financial and Capital Markets (Anbima), as of April 2017. Established in 1861, Caixa ranked as the third-largest bank in Brazil by assets and deposits, with BRL1.25 trillion in assets and BRL 4.1 billion in net income as of December 2016. Caixa is fully controlled by the Brazilian government and its ratings reflect the high probability of support from the federal government, if necessary. Investment Process Viter's investment process is well-established, based on committees with a top-down and sectorial approach and a long-term view supported by risk-area analyses. The asset manager has a long track record managing a wide range of portfolios, with demonstrated consistency and a robust set of controls. The research it provides is consistent with the investment universe and has demonstrated the discipline and repeatability of the firm's processes. Investment Resources Viter has a strong investment team with 35 professionals and a very low turnover. The portfolio management team is experienced, benefiting from the stability of its professionals, most of which have over 15 years in the market and with the group. The asset manager has a solid governance framework in which the decisions are made by committee and there is no key-person risk. Viter has a complete infrastructure that connects the mainframe systems of the conglomerate, mainly the bank, with the specific systems used by the asset manager. The integration with third party providers, including other business units of the group, is adequate to the required demands. The procedures are well integrated but there is room for improvement regarding systems integration and workflows. The custody area of the group is in the process of implementing a new asset control system, which should improve the degree of automation and overall efficiency. The implementation of this system, however, is taking longer than initially expected. The conclusion of this project has been postponed several times but is now expected to be completed this year. Also, Viter is in the initial stage of implementing a new front-office system, but this project does not have an expected end date. Risk Management Viter has a complete set of policies, committees and controls in place with an independent structure. The asset manager's risk culture is rather conservative, with several well-established market, credit and liquidity risk limits and close supervision from its main executives. Fund liquidity has been ample, benefiting from the high volume of sovereign debt. Also, the asset manager has specific policy for broker's selection and fair allocation, with strict controls. Breaches of limits have been low and promptly resolved. Investment Performance Consistent investment decision-making and risk management processes ensure that the performance of most of the strategies was appropriate and that the downside performance metrics were in line with its peers. Company and Client Servicing Viter is a leading player in the Brazilian asset management sector but its franchise is recognized more by its conservative and plain-vanilla fixed income products. The asset manager has shown strong and consistent financial results, and is one of the most important business units of the group. Viter has experience in different kinds of mandates, but its core clients are retail and pension funds. The asset manager provides a very good level of transparency and communication materials to its investors, while adhering to all the disclosure requirements of the Brazilian Securities and Exchange Commission (CVM) and Anbima. RATING SENSITIVITIES The rating of Viter Vice-Presidencia de Gestao de Ativos de Terceiros da Caixa may be sensitive to significant adverse changes to any of the aforementioned rating drivers, mainly a weakening of its financial profile, high professional turnover, or deterioration in its processes and policies. A material deviation from Fitch guidelines for any rating driver could lead to the rating being downgraded by Fitch. Contact: Primary Analyst Tiago Carrara Associate Director +55-11-4504-2217 Fitch Ratings Brasil Ltda. Alameda Santos, 700 - 7th floor - Cerqueira Cesar Secondary Analyst Pedro Gomes Director +55-11-4504-2604 Committee Chairperson Arturo Rueda Senior Director +52 81 8399 9106 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 Investment Management Quality Ratings (Assessing Active, Passive & Alternative Investment Managers, Strategies & Funds) (pub. 06 Mar 2017) here Metodologia de Rating de Qualidade de Gestão de Investimentos (Avaliando Gestores de Investimentos, Estratégias e Fundos, Ativos, Passivos e Alternativos) (pub. 06 Mar 2017) here Additional Disclosures Solicitation Status here 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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