Moody’s: Four Brazilian banks to negative

Moody's Investors Service said it changed to negative from stable the outlook on the ratings of four Brazilian banks, including Banco ABC Brasil SA, Banco Alfa de Investimento SA, Banco BBM SA and Banco Daycoval SA, including their long-term global local- and foreign-currency deposit ratings and their senior unsecured debt ratings.

At the same time, the agency affirmed all global ratings, including the baseline credit assessments.

Moody's said the outlook changes acknowledge that the ongoing economic recession poses downside risks to these banks' financial performance, and especially to their asset quality and profitability, because their loan books and revenue streams are less diversified than similarly rated Brazilian universal banks.

The deterioration of the operating environment, in line with Moody's expectation of economic contraction until 2016, creates lingering pressures on companies and households repayment capacity, and reduces confidence and business volumes. In this context, risks are skewed to the downside, and may lead to a higher and faster-than-expected strain on these banks' financial profiles.

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