MEXICO CITY: S&P Global Ratings has placed its ‘BBB’ long-term and ‘A-2’ short-term issuer credit ratings on Multibank on CreditWatch negative following Banco de Bogotá’s announcement of its intentions to acquire Multibank.
The acquisition’s closing is pending approvals form the respective authorities and regulators. The CreditWatch placement is based on a likelihood that Multibank could become Banco de Bogota’s subsidiary once all regulatory approvals are completed.
“Given that our long-term issuer credit rating on Banco de Bogotá is two notches below that on Multibank, we could downgrade it after the acquisition’s completion to the same level as the new GCP, which would be Banco de Bogota’s rating. This is because we believe that a relatively weaker parent could divert assets from the subsidiary or burden it with liabilities during financial stress, which diminish Multibank’s use of debt and capital,” a statement issued by S&P said.
“Our assessment of Multibank’s stand-alone credit profile (SACP) remains unchanged at ‘bbb’, continuing to reflect favorable operating revenue trend, ample business diversification, and historically solid corporate governance. Moreover, our ratings incorporate our projected risk-adjusted capital ratio of 11.4% for the next 24 months, and asset quality metrics in line with those of the Panamanian banking system and regional peers. Finally, our assessment of the bank’s funding reflects a large retail deposit base, prudent liquidity management, and manageable short-term obligations”.
Edited by Kazim Rizvi