MONTERREY, Mexico--(BUSINESS WIRE)--As a result of a similar rating action taken at Citigroup, Inc., Fitch Ratings has downgraded Banco Nacional de Mexico's (Banamex) local currency long-term Issuer Default Rating (IDR) to 'A-' from 'A' and removed the Rating Watch Negative. The Rating Outlook is now Stable. In addition, Fitch affirms Banamex's national scale ratings at 'AAA(mex)' and 'F1+(mex)'. A full list of rating actions appears at the end of this press release.
Banamex's IDRs reflect the strong support of its parent, Citigroup Inc. (rated 'A'/'F1' with a Stable Outlook by Fitch.) and Banamex's high strategic importance to Citigroup's global franchise. For further clarification please see Fitch's commentary 'Fitch Downgrades Citigroup's Support Driven Ratings', dated Dec. 15, 2011 and available at www.fitchratings.com.
Banamex's support rating and IDRs will likely remain driven by sovereign and/or country ceiling considerations. Downside potential is limited at present, now that Banamex's IDRs are aligned to its viability rating of 'a-'. Therefore, Banamex's IDRs could only be negatively affected by a downgrade of Citigroup's IDRs, and would be accompanied by deterioration of Banamex's viability rating.
Banamex's viability rating is driven by its ample loss absorption capacity, strong and resilient earnings, robust franchise, and sound liquidity. However, this rating also takes into account the gradual process of rebuilding pre-crisis core earnings, a trend currently constrained by low interest rates, above average credit costs, and somewhat volatile trading revenues. In Fitch's opinion, the confluence of an improved operating environment and sustained recovery of profitability metrics arising from declining provisions could eventually result in an upgrade of Banamex's viability rating and therefore its IDRs over the medium term.
Banamex, owned by Grupo Financiero Banamex (GFBanamex), is one of Mexico's largest banks, with 16% and 19% of the sector's loans and deposits, respectively, at 3Q11. While Banamex is a broadly diversified bank, it has a particularly strong position in corporate lending and retail products, primarily credit cards and current account deposits.
Fitch downgrades and removes the Rating Watch Negative from the following rating:
Banamex:
--Long-term local currency IDR to 'A-' from 'A'; Outlook Stable.
The following ratings were affirmed:
Banamex:
--Long-term foreign currency IDR at 'A-'; Outlook Stable;
--Short-term foreign currency IDR at 'F1';
--Short-term local currency IDR at 'F1';
--Viability rating of 'a-';
--Individual rating at 'B/C';
--Support rating at '1';
--Long-term national-scale rating at 'AAA(mex)'; Outlook Stable;
--Short-term national-scale rating at 'F1+(mex)';
--Long-term national-scale rating for local senior debt issues at 'AAA(mex)'.
Additional information is available at 'www.fitchratings.com'. The ratings above were solicited by, or on behalf of, the issuer, and therefore, Fitch has been compensated for the provision of the ratings.
Applicable Criteria and Related Research:
--'Global Financial Institutions Rating Criteria' (Aug. 16, 2011);
--'National Ratings Criteria' (Jan. 19, 2011).
Applicable Criteria and Related Research:
Global Financial Institutions Rating Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=649171
National Ratings Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=595885
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