Fitch: Banrural and Banco G&T Tested by Allegations of Illicit Acts by Managers

NEW YORK--()--Fitch Ratings notes that recent allegations of illicit acts committed by three senior managers and directors of Banco de Desarrollo Rural and one senior manager of Banco G&T Continental have required the banks to take immediate protective measures to maintain their financial and business profile.

Specifics of the alleged wrongdoing have not been fully disclosed by the authorities, but appear related to accusations of money laundering and illicit payments to the political party, Partido Patriota. These allegations became known on June 2, 2016, when the International Commission against Impunity in Guatemala (CICIG, as it is known in Spanish) presented the findings of this ongoing investigation which resulted in arrest warrants for multiple individuals.

Guatemalan authorities have to date limited their proceedings to named individuals and have not implicated the banks; however, in Fitch's opinion both institutions are taking the necessary steps to prevent any negative impact on their reputations as a result of these accusations. In the agency's view, the potential impact of these events has been effectively contained by the actions taken by the banks, which include rapidly relieving these named executives of their duties and appointing replacements.

Fitch believes the financial profiles of both banks are unlikely to see a significant impact on corporate governance and risk management, or changes in funding conditions, as long as these allegations do not reflect on the banks. Up to this point both entities are running normally. During the following months, Fitch will continue to monitor the information available on these cases and the extent of the potential impact, if any. These events would only have rating implications if they materially affect the banks' financial and business profiles, which is not Fitch's baseline scenario.

Fitch currently has the following ratings:

Banco de Desarrollo Rural:

--Long-Term Issuer Default Rating (IDR) 'BB'; Outlook Stable;

--Short-Term IDR 'B';

--Long-Term Local Currency IDR at 'BB'; Outlook Stable;

--Short-Term Local Currency IDR 'B';

--Viability Rating 'bb';

--Support Rating '3';

--Support Rating Floor at 'BB-';

--Long-Term National rating 'AA+(gtm)'; Outlook Stable;

--Short-Term National rating 'F1+(gtm)'.

Banco G&T Continental:

--Long-Term Foreign currency IDR 'BB'; Outlook Stable;

--Short-Term Foreign Currency IDR 'B';

--Long-Term Local Currency IDR 'BB'; Outlook Stable;

--Short-Term Local Currency IDR 'B';

--Viability Rating 'bb';

--Support '3';

--Support Rating Floor 'BB-';

--Long-Term National rating 'AA-(gtm)'; Outlook Stable;

--Short-Term National rating 'F1+(gtm)'.

Additional information is available on www.fitchratings.com

Related Research:

Banco G&T Continental S.A.

Banco de Desarrollo Rural, S.A.

Related Research

Banco G&T Continental, S.A.

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=866026

Banco de Desarrollo Rural

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=861309

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Contacts

Fitch Ratings
Mark Narron
Director
+1-212-612-7898
Fitch Ratings, Inc.
33 Whitehall St.
New York, NY 10004
or
Rolando Martinez
Director
+503 2516 6619
or
Marcela Galicia
Director
+503 2516 6616
or
Media Relations:
Elizabeth Fogerty, New York, +1 212-908-0526
Email: elizabeth.fogerty@fitchratings.com

Contacts

Fitch Ratings
Mark Narron
Director
+1-212-612-7898
Fitch Ratings, Inc.
33 Whitehall St.
New York, NY 10004
or
Rolando Martinez
Director
+503 2516 6619
or
Marcela Galicia
Director
+503 2516 6616
or
Media Relations:
Elizabeth Fogerty, New York, +1 212-908-0526
Email: elizabeth.fogerty@fitchratings.com