MONTERREY, Mexico--(BUSINESS WIRE)--Fitch Ratings has published foreign and local currency long-term Issuer Default Ratings (IDRs) of 'B-' and assigned short-term IDRs of 'B' to Argentina's Banco Supervielle S.A. The long-term rating Outlook is Negative, in line with that of the sovereign and most of the country's rated banks.
In addition, Fitch has assigned a Viability Rating (VR) of 'b-' to Banco Supervielle, Support Rating (SR) and Support Rating Floor (SRF) of '5' and 'NF', respectively, as well as a Recovery Rating of 'RR5' to the global subordinated debt. Fitch also affirmed Banco Supervielle's global subordinated debt for USD50 million due 2017 at 'CCC/RR5', one notch below the bank's long-term local currency IDR.
KEY RATING DRIVERS
Banco Supervielle's VR and IDRs are driven by the adverse economic and operating environment, and the relatively tight loss absorption capacity in the form of core capital and/or loan loss reserves, but also considering the bank's strong profitability, sound and stable asset quality, good funding and liquidity profile, and gradually strengthening franchise.
The adverse economic, operating, and regulatory environment also underpins the SR and SRF of '5' and 'NF', since Fitch considers that external support for Banco Supervielle, in case of need, cannot be relied upon under current circumstances, as is the case of most Argentine banks.
The 'CCC/RR5' rating of Banco Supervielle's subordinated debt reflects that these securities are plain-vanilla subordinated liabilities, without any deferral feature on coupons and/or principal. Therefore, these are notched only once to reflect the below average expected recoveries for these bonds in case of bank liquidation.
RATING SENSITIVITIES
Downside risk to Banco Supervielle's IDRs and VR could stem from a sovereign rating downgrade and/or a material deterioration of the operating environment for financial institutions. Under current circumstances, Fitch considers unlikely that Argentine banks could be rated above the sovereign. In turn, Banco Supervielle's IDRs and VR could be negatively affected by a Fitch core capital ratio below 3% and/or operating losses coupled with aggressive loan growth or rapidly deteriorating asset quality.
On the other hand, Fitch does not envision positive rating actions for Argentine banks in the near future. However, if the sovereign rating is eventually upgraded, Banco Supervielle's IDRs and VR would only be upgraded if accompanied by a stronger loss absorption capacity, with a Fitch core capital ratio and/or consolidated loan reserve coverage above 8% and 100%, respectively.
Fitch considers that the upside potential for Banco Supervielle's SR and SRF is virtually inexistent in the foreseeable future, since this would be contingent on a material improvement of the political, operating, and regulatory environment, coupled with a sustained strengthening of the bank's systemic importance.
The rating of the subordinated debt will likely remain one notch below Banco Supervielle's local currency long-term IDR under most circumstances, meaning that this issue rating would move accordingly with any change in the bank's IDRs.
Fitch published the following ratings:
Banco Supervielle:
--Foreign and local currency long-term IDRs at 'B-'; Outlook Negative.
Fitch has assigned the following ratings:
Banco Supervielle:
--Viability Rating at 'b-';
--Foreign and local currency short-term IDRs at 'B';
--Support Rating at '5';
--Support Rating Floor at 'NF';
--Recovery Rating to the Subordinated Debt at 'RR5'.
Fitch has affirmed the following rating:
Banco Supervielle:
--Subordinated debt at 'CCC'.
Additional information is available on www.fitchratings.com.
Applicable Criteria and Related Research:
-- Global Financial Institutions Rating Criteria (Aug. 15, 2012);
-- Assessing and Rating Bank Subordinated and Hybrid Securities (Dec. 05, 2012).
Applicable Criteria and Related Research:
Global Financial Institutions Rating Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=686181
Assessing and Rating Bank Subordinated and Hybrid Securities
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=695542
Additional Disclosure
Solicitation Status
http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=807428
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. 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.