Fitch: Omni S.A.'s Purchase of Banco Pecunia's Shares Neutral to Omni's Ratings

SAO PAULO & NEW YORK--()--Fitch Ratings considers the announced acquisition of Banco Pecunia (Pecunia) by Omni S.A. -Credito, Financiamento e Investimento (Omni) as neutral to Omni's ratings.

On Feb. 18, 2016, Omni entered into a Share Purchase and Sale Agreement to acquire 100% of Pecunia shares held by Banco Societe Generale Brasil S.A. ('AAA(bra)'/Outlook Stable) taking over the remaining operations of Pecunia in Brazil. The completion of the acquisition is subject to regulatory approvals, which are expected in time for Omni to begin operating the bank in January 2017. The purchase will be fully paid in cash and the acquired assets are expected to be very liquid.

In the meantime, Pecunia will continue to allow the remaining portfolio to runoff or be sold thus when the purchase finally takes place, the remaining assets are expected to be in similar size of the equity which is estimated to be equivalent to about 10% of the equity of Omni. The increase in assets will be insignificant as the transaction will result in an expansion of only about 2% of Omni's consolidated assets.

In effect, Omni is buying the banking license of a bank that is currently operating. The existing vehicle portfolio on Omni will continue to be booked in the finance company and the finance company will own the bank which is expected initially to be used as a funding vehicle. Over time, other banking products are expected to enable Omni to diversify its revenues, but initially the main purpose of the purchase is to allow the Omni group of financial institutions to benefit from the greater funding diversification generally available to banks, and to gain greater access to investors that had restricted themselves to bank risk as they were uncomfortable with exposure to finance companies.

Management also expects the acquisition to also benefit the group through lowering operational costs through greater efficiencies and eliminate the company's dependence on correspondent banks for services it did not have access to as a non-bank.

Fitch believes the Pecunia acquisition has adequate complementarity with Omni's business model and can help the bank expand its funding diversification and improve efficiencies depending also on the development of Brazil's operational environment. However, this purchase is not expected, alone, to positively or negatively impact Omni's ratings, nor impact Omni's Fitch core Capital Ratio. Fitch will continue to monitor the evolution of Omni's credit metrics focusing on its profitability, liquidity, capitalization and asset quality especially given the challenging operating environment.

Fitch currently rates Omni as follows:

--Long-term foreign currency Issuer Default Rating (IDR) 'B'; Outlook Stable;

--Long-term local currency IDR 'B; Outlook Stable;

--Short-term local currency IDR 'B';

--Short-term foreign currency IDR 'B';

--National long-term rating 'BBB(bra)'; Outlook Stable;

--National short-term rating 'F3(bra)';

--Support rating '5';

--Support rating floor 'NF'.

Additional information is available on www.fitchratings.com.

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Contacts

Fitch Ratings
Primary Analyst
Robert Stoll
Director
+1-212-908-9155
Fitch Ratings, Inc.
33 Whitehall St.
New York, NY 10004
or
Secondary Analyst
Jean Lopes
Director
+11 55 11-4503-2617
or
Media Relations:
Elizabeth Fogerty, New York, +1 212-908-0526
Email: elizabeth.fogerty@fitchratings.com

Contacts

Fitch Ratings
Primary Analyst
Robert Stoll
Director
+1-212-908-9155
Fitch Ratings, Inc.
33 Whitehall St.
New York, NY 10004
or
Secondary Analyst
Jean Lopes
Director
+11 55 11-4503-2617
or
Media Relations:
Elizabeth Fogerty, New York, +1 212-908-0526
Email: elizabeth.fogerty@fitchratings.com