Banco Surinvest expects upgrade in 2012 following Fitch's outlook revision

Monday, May 2, 2011

Uruguayan bank Banco Surinvest is expecting to receive a ratings upgrade next year after Fitch's recent revision of its rating outlook to positive from stable, bank CEO Graciela Reybaud told BNamericas.

The agency revised the bank's B foreign and local currency issuer default rating and BBB national scale long-term rating outlooks on April 28, citing improvements seen in the bank's corporate governance and increased integration with its owner, Geneva-based Banque Heritage, after it raised its share in Surinvest to 100% in 2H10.

"Fitch's rating revision adds to a series of actions the bank has been implementing over the last few months, which include a well-defined business strategy, with a focus on private banking and corporate services both for Uruguayan and foreign companies and with the change of brand [to Banque Heritage]," Reybaud said.

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"We expect [the upgrade] to happen next year, once we consolidate our ongoing plans," she said.

Due to Surinvest's business strategy, the bank has low funding requirements. Its main funding source is short-term deposits by non-residents, and its deposit concentration is high relative to Uruguayan peers.

The bank had 1,000 depositors - about 90% of whom are non-resident customers - and 3.18bn pesos (US$166mn) in assets as of end-2010, making it Uruguay's second smallest bank.

Surinvest's capitalization is strong relative to its Uruguayan peers and similarly rated banks.

"Nevertheless, capitalization ratios have declined over the past four years due to Surinvest's weak financial performance," Fitch wrote in a report, adding that it would continue monitoring the bank's performance to evaluate the possible effect on its solvency.

Surinvest was founded in 1981 and posted a 56.6mn-peso loss last year. It ended 2010 with a loan portfolio of 2.44bn pesos and plans to double that figure by year-end.

To read the full Fitch report, go to this link