Fitch: Bank Resolution Not a Priority in Latin America

NEW YORK--()--According to a special report published by Fitch Ratings titled 'Sovereign Support for Banks, Rating Path Expectations', the evolving dynamics of sovereign support for senior creditors of banks are not likely to affect Long-term Issuer Default Ratings (IDRs) or senior debt ratings of Fitch-rated Latin American banks where such ratings are driven by Support Rating Floors (SRFs) over the next two years.

In Latin America, Fitch has assigned SRFs to state-owned Dominican and Panamanian banks, as well as domestic systemically important financial institutions (D-SIFIs) in Brazil, Chile, Colombia, Costa Rica, Guatemala, Jamaica, Mexico and Peru. As Fitch believes that in general, the authorities have both the willingness and capacity to provide support should it be required, and that they are not inclined to weaken their attitude toward bank support in the near term, there will be no immediate impact on ratings.

In the case of other Latin American banks without a SRF or a SRF of No Floor (NF), sovereign support is not applicable to these banks' potential rating paths. This would include all banks in Argentina, Ecuador, El Salvador and Venezuela, as well as D-SIFIs in the Dominican Republic and Panama, among other Latin American countries.

Although Brazil and Mexico are among the G-20 countries involved in the Financial Stability Board's effective resolution agenda, bank resolution is less of a priority relative to the EU and U.S. Support assumptions are most likely to weaken over time in these countries; however, Fitch does not expect any material changes over the typical ratings horizon of up to two years. Currently, there is no agenda to weaken sovereign support of senior creditors in either country. In other Latin American countries, discussion has been even more limited with respect to bank resolution or potential restrictions of sovereign support to bail out nonviable banks.

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria and Related Research:

--Global Institutions Financial Rating Criteria (Jan. 31, 2014)

--Sovereign Support for Banks (Dec. 2013)

--The Evolving Dynamics of Support for Banks (Sept. 2013)

--Bank Support: Likely Rating Paths (Sept. 2013)

Applicable Criteria and Related Research:

Bank Support: Likely Rating Paths

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=715001

The Evolving Dynamics of Support for Banks

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=715000

Sovereign Support For Banks: Update on Position Outlined in 3Q13

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=726698

Sovereign Support For Banks: Rating Path Expectations

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=741975

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Contacts

Fitch Ratings
Franklin Santarelli
Managing Director
+1-212-908-0739
Fitch Ratings, Inc.
One State Street Plaza
New York, NY 10004
or
Theresa Paiz Fredel
Senior Director
+1-212-908-0534
or
Media Relations:
Elizabeth Fogerty, New York, +1 212-908-0526
Email: elizabeth.fogerty@fitchratings.com

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Contacts

Fitch Ratings
Franklin Santarelli
Managing Director
+1-212-908-0739
Fitch Ratings, Inc.
One State Street Plaza
New York, NY 10004
or
Theresa Paiz Fredel
Senior Director
+1-212-908-0534
or
Media Relations:
Elizabeth Fogerty, New York, +1 212-908-0526
Email: elizabeth.fogerty@fitchratings.com