S&P: Banco Patagonia 'B-/C' Ratings Affirmed On The Parent's Announcement Of Potential Sale
The rating action follows Banco do Brasil's announcement that it's considering a proposal for Banco Patagonia to hold a public offering of its shares. Currently, Banco do Brasil owns 58.97% of Banco Patagonia's equity; therefore, the Brazilian bank is the ultimate parent of the Argentinean bank. At this point, we're keeping the Banco Patagonia's group status as a moderately strategic subsidiary. We may revise the group status on after the finalization on the transaction and depending on the parent's final stake in the bank.
Nevertheless, any change in the group status won't impact the issuer credit rating on Banco Patagonia. The ratings don't incorporate notches of support from the parent and are limited by the sovereign rating on Argentina, which is two notches below the bank's stand-alone credit profile (SACP).
Currently, our ratings on Banco Patagonia reflect its adequate business position as a mid-size bank in Argentina, moderate capital and earnings based on our risk-adjusted capital ratio projection, adequate risk position with operations focused on lending activities and healthy assets quality metrics, average funding, and adequate liquidity, which is in line with peers and taking into account characteristics in Argentina. The bank's stand-alone credit profile (SACP) is 'b+'. The local currency and foreign currency ratings on Argentina continue to limit the ratings on the bank. We rarely rate financial institutions higher than the sovereigns in which they operate because we consider it unlikely that these institutions would be unaffected by developments in domestic economies.