Moody's downgrades Brazil's Banco Votorantim
Moody's has downgraded Banco Votorantim's (BV) deposit and senior debt ratings to 'Ba1' from 'Baa3.'
The Brazilian bank's baseline credit assessment was lowered to 'Ba2' from 'Ba1' and its outlook affirmed at negative due to "the continuing pressures on asset risk, capital and profitability, which remain vulnerable to the recessionary economic environment."
BV's modest profitability will continue to be threatened by difficult operating conditions expected to stretch into 2016, which will force the bank to increase provisions because of loan exposures to segments that are more sensitive in an economic crisis, the ratings agency said.
Efforts to strengthen BV's capitalization are also expected to be delayed.
The bank's deposit and senior debt ratings downgrade derived from the lowered BCA rating.
"[The downgrade] also incorporates a one notch of affiliate support uplift, to reflect Moody's view of the high likelihood of support from Banco do Brasil S.A. (BCA of ba1)," the ratings agency said.
BV gets a significant amount of funding from Banco do Brasil (BB), its 50% controlling shareholder, by way of an agreement in which BB acquires vehicle loans from BV.
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