Fitch Downgrades Banco de la Nacion Argentina's (Sucursal Uruguay) LC IDR to 'CCC'

MONTERREY, Mexico & NEW YORK--()--Fitch Ratings has downgraded Banco de la Nacion Argentina's (Sucursal Uruguay) (BNAUY) Local Currency (LC) long-term Issuer Default Rating (IDR) to 'CCC' from 'B-'. Simultaneously, Fitch has upgraded the bank's Foreign Currency (FC) long-term IDR to 'CCC' from 'CC' and affirmed its Support Rating at '5'.

KEY RATING DRIVERS

IDRs

The downgrade of BNAUY's LC IDR to 'CCC' from 'B-'/Negative Outlook aligns it with the LCR IDR of Argentina. This action follows the recent restrictive default of the Argentine sovereign, which also triggered a downgrade of the country's sovereign long-term LC IDR and Country Ceiling to 'CCC' from 'B-' (for additional details, see 'Fitch Downgrades Argentina's FC IDR to 'RD', dated July 31, 2014 and available at www.fitchratings.com).

The upgrade of BNAUY's FC IDR to 'CCC' from 'CC' also aligns it with the credit worthiness of Argentina. Although the sovereign's FC IDR was downgraded to 'RD' (due to the current default status of certain debt securities affected by a court ruling), on Fitch's view the sovereign payment capacity is currently measured by the 'CCC' rating on its LC and FC debt securities issued under Argentina Law.

BNAUY is a fully integrated branch of Banco de la Nacion Argentina's (BNA). BNA's creditworthiness is intrinsically aligned with that of the sovereign, not only because the existing explicit guarantee in place, but also given its systemic importance as the largest bank in Argentina.

BNAUY's ratings reflect the high probability of receiving support, if it were needed, from the Republic of Argentina. BNA liabilities (including its branches abroad) are fully guaranteed by the Republic of Argentina.

BNA is the largest commercial bank in Argentina, with 27% deposit and 21% loan market shares, with the largest nationwide coverage and is a leader in most business lines. Similar to other government-owned banks, BNA has a sizable exposure to both loans and investments in government securities while enjoying the best funding base in its home country. Foreign branches are used by BNA (including BNAUY) to foster trade finance operations and the operations of Argentinean companies abroad. Government exposure at BNAUY is significantly below than of BNA.

SUPPORT RATING

BANUY's support rating of '5' considers that external support, although possible (and backed by an explicit guarantee), cannot be relied upon, given the high political interference risk and ample economic imbalances of the Republic of Argentina.

RATING SENSITIVITIES - IDRS & SUPPORT RATING

The FC and LC IDRs do not have Rating Outlooks.

BNAUY's ratings continue sensitive to Argentina's sovereign rating and its capacity and willingness to provide support to BNA and its branches.

Additional information is available on www.fitchratings.com

Applicable Criteria and Related Research:

--'Global Financial Institutions Rating Criteria', Jan. 31, 2014;

--'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=732397

Rating FI Subsidiaries and Holding Companies

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

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=846794

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Contacts

Fitch Ratings
Primary Analyst
Alejandro Tapia
Director
+52 818 399 9156
Fitch Mexico S.A. de C.V.
Prol. Alfonso Reyes 2612
64920 Monterrey, Mexico
or
Secondary Analyst
Veronica Chau
Director
+52 818 399 9169
or
Committee Chairperson
Franklin Satarelli
Managing Director
+1-212-908-0739
or
Media Relations
Elizabeth Fogerty, New York, +1 212-908-0526
elizabeth.fogerty@fitchratings.com

Contacts

Fitch Ratings
Primary Analyst
Alejandro Tapia
Director
+52 818 399 9156
Fitch Mexico S.A. de C.V.
Prol. Alfonso Reyes 2612
64920 Monterrey, Mexico
or
Secondary Analyst
Veronica Chau
Director
+52 818 399 9169
or
Committee Chairperson
Franklin Satarelli
Managing Director
+1-212-908-0739
or
Media Relations
Elizabeth Fogerty, New York, +1 212-908-0526
elizabeth.fogerty@fitchratings.com