SAN SALVADOR & NEW YORK--(BUSINESS WIRE)--Fitch Ratings has upgraded Banco de Costa Rica (BCR) and Banco Internacional de Costa Rica's (BICSA) long-term foreign currency Issuer Default Rating (IDR) to 'BB+' from 'BB'. The upgrade follows Fitch's recent upgrade of Costa Rica's sovereign IDR to 'BB+' from 'BB'. The Rating Outlook of both BCR and BICSA is Stable.
Fitch has also upgraded BCR's Support rating floor as well as BICSA's national ratings in Panama and El Salvador. A detailed list of rating actions follows at the end of this commentary.
On March 4, 2011, Fitch upgraded Costa Ricas's long-term foreign currency IDR to 'BB+' from 'BB', while the Outlook remained Stable. In turn, Costa Rica's long-term local currency IDR was affirmed at 'BB+' and short-term IDRs at 'B' (see Fitch's Rating Action Commentary 'Fitch Upgrades Costa Rica to 'BB+'; Outlook Stable', available on Fitch's web site at 'www.fitchratings.com'.)
The upgrade of BCR's IDR and Support rating floor are driven by and aligned with Costa Rica's upgraded sovereign rating, since the government is BCR's sole shareholder, and it grants an explicit guarantee for BCR and other state-owned banks' liabilities. In turn, BICSA's ratings are being upgraded as they reflect the commercial and operating support it receives from its main shareholder, BCR (51% stake; Banco Nacional de Costa Rica holds the remainder 49% stake). Although BICSA does not benefit from the sovereign guarantee that Costa Rican state-owned banks have, Fitch believes that support for BICSA could be provided by its major shareholder.
Should Costa Rica's sovereign rating be upgraded, BCR's IDRs would be upgraded accordingly. Alternatively, BCR's IDRs could benefit from the confluence of an upgraded Individual rating and a materially improved operating environment relative to current conditions. Downside risk for the bank's ratings would arise should Costa Rica's sovereign ratings be downgraded. On the other hand, BICSA's IDRs would be positively influenced by an upgrade of BCR's IDRs or, alternatively, BICSA's own Individual rating. Downside risk for the bank's ratings would stem from the discontinuation of BCR's ability and/or willingness to provide support, which Fitch considers unlikely at present.
Established in 1877 and wholly owned by the government, BCR is one of the oldest banks in Central America and the second largest in Costa Rica, with market share by assets of 20% as of December 2010. In addition to BICSA, it also has three small local wholly-owned subsidiaries involved in non-credit activities.
Established in Panama in 1976, BICSA specializes in wholesale banking. It has an agency in Miami and representative offices in Guatemala, Nicaragua and El Salvador. The majority of its corporate business is carried out with Costa Rican customers. BICSA's core business has increasingly migrated toward corporate banking and, to a lesser extent, correspondent banking services.
Fitch has taken the following rating actions:
BCR:
International ratings
--Long-term foreign currency IDR upgraded to 'BB+' from 'BB'; Outlook Stable;
--Support rating floor upgraded to 'BB+' from 'BB';
--Short-term foreign currency IDR affirmed at 'B';
--Long-term local currency IDR affirmed at 'BB+'; Outlook Stable;
--Short-term local currency IDR affirmed at 'B';
--Support affirmed at '3';
--Individual rating remains at 'C/D'.
National-scale ratings
--Long-term rating affirmed at 'AA+(cri)'; Outlook Stable;
--Short-term rating affirmed at 'F1+(cri)';
--Long-term rating for local issues of senior unsecured debt affirmed at 'AA+(cri)';
--Short-term rating for local issues of senior unsecured debt affirmed at 'F1+(cri)'.
BICSA:
International ratings
--Long-term foreign currency IDR upgraded to 'BB+' from 'BB'; Outlook Stable;
--Short-term foreign currency IDR affirmed at 'B';
--Support affirmed at '3';
--Individual rating remains at 'C/D'.
National-scale ratings
--Long-term rating upgraded to 'AA-(pan)' from 'A+(pan)'; Outlook Stable;
--Short-term rating upgraded to 'F1+(pan)' from 'F1(pan)';
--Long-term rating for local issues of senior unsecured debt upgraded to 'AA-(pan)' from 'A+(pan)';
--Short-term rating for local issues of senior unsecured debt upgraded to 'F1+(pan)' from 'F1(pan)';
--Long-term rating in El Salvador for local issues of senior unsecured debt upgraded to 'AA+(slv)' from 'AA(slv)'.
Additional information is available at www.fitchratings.com
Applicable Criteria and Related Research:
--'Global Financial Institutions Rating Criteria', dated Aug. 16, 2010;
--'National Ratings Criteria', dated Jan. 19, 2011.
Applicable Criteria and Related Research:
Global Financial Institutions Rating Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=547685
National Ratings Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=595885
ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. 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.