OREANDA-NEWS. Fitch Ratings has taken various rating actions on the following banks controlled by Brazilian subnationals:

--Banestes S. A. - Banco do Estado do Espirito Santo (Banestes),

--Banco do Estado de Sergipe (Banese)

--Banco do Estado do Rio Grande do Sul S. A. (Banrisul)

--Banco de Brasilia S. A. (BRB)).

A full list of rating actions is provided at the end of this release.

For further details on these entities, as well as for regulatory information, including the rating drivers and sensitivities, please see the individual press releases for each bank published and available on Fitch's website at 'www. fitchratings. com' and 'www. fitchratings. com. br'..

The Issuer Default Ratings (IDRs) of Banestes and Banrisul and Banese's National Rating are driven by their standalone performance. BRB's IDRs are driven by support from Distrito Federal. Fitch internally assesses the respective financial and economic standing of each bank's controlling subnational, as their main shareholders and given their strong performance in the region of their controllers, such assessments can influence the ratings of these public banks.

The credit profiles of these four banks remain highly sensitive to further operating environment deteriorations in the respective regions where their operations are concentrated. The Outlook for Banrisul, Banestes and BRB's IDR is Negative. For Banese, Fitch only assigns a National Rating. The Rating Outlook is currently Negative due to the operating environment and the weakening of a few performance ratios, after adjustments to the conglomerate's card company.

These four institutions operate as commercial banks oriented both to companies and to individuals. Their performance is strong in the region of their controlling subnational. With strong franchises, they offer a wide array of banking products that allows them to compete in their regions against larger banks with nationwide operations. These four banks heavily service public servants in their regions and could be affected by any potential difficulties faced by subnationals to pay their obligations.

Similar to other state-owned companies, the strategies and targets of these four banks can be influenced by the state's economic-financial situation and by political interference from their respective main shareholders. However, Fitch notes that these four banks are able to operate with relative autonomy. Governmental changes for the controlling subnationals can lead to more frequent changes in the four banks' executive boards than their private peers.

As a general rule, the subnational banks have reduced their appetite for risk, much like their private sector peers have. This becomes evident in their growth trends, which have shown more modest ratios than in the past. The asset quality indicators of these four banks have deteriorated in 2015 and in the first quarter of 2016. Fitch believes that the deterioration should continue until end-2016, due to the continued economic recession in Brazil and the controlling subnationals, maintenance of high inflation and unemployment rates, as well as the weak outlook for most corporate sectors.

Fitch has taken the following rating actions:

Banrisul

--Long-Term Foreign and Local Currency IDRs affirmed at 'BB-'; Outlook Negative;

--Short-Term Foreign and Local Currency IDRs affirmed at 'B';

--Viability Rating affirmed at 'bb-';

--Support Rating affirmed at '4';

--Support Rating Floor affirmed at 'B';

--Long-Term National Rating downgraded to 'A+(bra)' from

'AA-(bra)'; Outlook Negative;

--Short-Term National Rating downgraded to 'F1 (bra)' from 'F1+(bra)';

--Rating of the first issuance of senior unsecured financial bills downgraded to 'A+(bra)' from

'AA-(bra)';

--Rating of the Tier II capital subordinate notes, due in February 2022, affirmed at 'BB-'.

BRB

--Long-Term Foreign and Local Currency IDRs affirmed at 'BB-'; Outlook Negative;

--Short-Term Foreign and Local Currency IDRs affirmed at 'B';

--Viability Rating Downgrade to b+ from 'bb-' ;

--Support Rating Upgraded to '3' from '4';

--Long-Term National Rating downgraded to 'A+(bra)' from

'AA-(bra)'; Outlook Stable;

--Short-Term National Rating downgraded to 'F1 (bra)' from 'F1+(bra)';

Banestes

--Long-Term Foreign and Local Currency IDRs affirmed at 'BB-'; Outlook Negative;

--Short-Term Foreign and Local Currency IDRs affirmed at 'B';

--Viability Rating affirmed at 'bb-';

--Support Rating affirmed at '4';

--Long-Term National Rating affirmed at 'A+(bra)'; Outlook Stable;

--Short-Term National Rating affirmed at 'F1+ (bra)';

Banese

--Long-Term National Rating affirmed at 'BBB+(bra)'; Outlook Negative;

--Short-Term National Rating affirmed at 'F3 (bra)';