OREANDA-NEWS. S&P Global Ratings affirmed its 'BB/B' global scale and 'brA+/brA-1' national scale issuer credit ratings on Banco Votorantim S. A. (BV), ; 'brA-' issue-level rating on BV Leasing Arrendamento Mercantil S. A., and 'brA+/brA-1' ratings Votorantim Financas. We also removed the ratings from CreditWatch negative. The outlook is negative.

The rating actions follow on the shareholder and ultimate parent Votorantim S. A. (Votorantim; BB+/Negative/brAA+). Ratings on BV are one notch above its SACP of 'bb-' due to our assessment of the holding company, Votorantim Financas, as a moderately strategic subsidiary of Votorantim. The bank is a core subsidiary of Votorantim Financas; therefore, the ratings on the bank are the same as on the former. We consider BV, through Votorantim Financas, to be part of Votorantim's GCP. In our ratings on BV, BV Leasing Arrendamento Mercantil, and Votorantim Financas, we incorporate potential ongoing support from Banco do Brasil, particularly on liquidity if necessary.

Our GCP assessment of the Votorantim group incorporates a potential contingent liability from BV through Votorantim Financas that may spill over to the ultimate holding level. This results from our understanding that under the Brazilian law (9,447/1997), the individuals or legal entities exercising control over a financial institution subject to intervention or liquidation are jointly and severally liable with the lender's officers and managers for the amount of its unpaid liabilities. While the responsibility of a controlling shareholder to support the bank isn't equivalent to a financial guarantee (it does not guarantee timely payment), it's a legal obligation ultimately enforceable via a potential freeze on assets. In our view, this creates a very strong incentive for the Votorantim group to capitalize the bank when needed.