Fitch Rates Planned Reopening of BBVA Bancomer's Subordinated Preferred Notes due 2022 'BBB'

MONTERREY, Mexico--(BUSINESS WIRE)--Fitch Ratings assigns a 'BBB' rating to the planned reopening of BBVA Bancomer's issuance of dollar-denominated fixed rate subordinated preferred notes due 2022. This issue was originally launched in July 2012 for USD 1 billion.

The 'BBB' rating assigned to the subordinated preferred notes is two notches below BBVA Bancomer's viability rating (VR) of 'a-', in accordance with Fitch's rating criteria (see 'Rating Bank Regulatory Capital and Similar Securities' dated Dec. 15, 2011 at 'www.fitchratings.com'). This reflects the moderate degree of subordination and non-performance risk of these securities. In the event of bankruptcy (concurso mercantil), liquidation or dissolution, these notes will rank junior to all of BBVA Bancomer's present and future senior indebtedness, pari passu with all other present or future unsecured subordinated preferred liabilities, and senior only to subordinated non-preferred indebtedness and common equity.

BBVA Bancomer's 'a-' VR and 'A-' long-term Issuer Default Ratings (IDRs) reflect the bank's strong franchise, risk and revenue diversification, resilient earnings throughout different phases of the business cycle (1H12 Operating ROAA: 2.43%), ample and stable customer deposits, and reasonable asset quality metrics (2Q12 impairment and reserve coverage ratios: 3.44% and 122%, respectively). The ratings also consider BBVA Bancomer's lower than peers core capital levels (2Q12: 10.72% of risk weighted assets), and a slightly higher, though still conservative, loans to deposits ratio (2Q12: 105.94%).

The Rating Outlook on BBVA's Bancomer's IDRs remains Negative (see 'Fitch Takes Actions on BBVA's Latin American Subsidiaries' dated June 15, 2012). While the key rating factors driving its VR and IDRs have remained mostly stable, the Negative Outlook reflects the inherent linkage of a subsidiary and its parent, being that currently BBVA Bancomer's VR and IDRs are one notch above the rating of its parent, Spain's BBVA.

BBVA Bancomer's VR and IDRs could be unaffected if the parent company is eventually downgraded one notch further. However, the Negative Outlook reflects that these ratings could be affected by a downgrade of two or more notches at the parent level. Deterioration of the financial position of BBVA Bancomer could also result in a downgrade of its VR and IDRs. Any potential downgrade of the BBVA Bancomer's VR would likely result in a similar action on the rating of these hybrids.

Additional information is available at www.fitchratings.com

Applicable Criteria and Related Research:

--'Global Financial Institutions Rating Criteria' (Aug. 15, 2012);

--'Treatment of Hybrids in Bank Capital Analysis' (July 9, 2012);

--'Rating Bank Regulatory Capital and Similar Securities' (Dec. 15, 2011);

--'Rating FI Subsidiaries and Holding Companies' (Aug. 10, 2012).

Applicable Criteria and Related Research:

Global Financial Institutions Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=686181

Treatment of Hybrids in Bank Capital Analysis

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=682453

Rating Bank Regulatory Capital and Similar Securities

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=656371

Rating FI Subsidiaries and Holding Companies

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=679209

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