Moody's lowers Banco BMG

Moody's Investors Service said it downgraded Banco BMG SA's long-term global local- and foreign-currency deposit ratings to Ba3 from Ba2.

The long- and short-term Brazilian national scale deposit ratings were lowered to A3.br from Aa3.br and to BR-2 from BR-1, respectively.

Moody's also said it downgraded the bank's foreign-currency senior unsecured debt rating to Ba3 from Ba2 and the subordinated debt rating to B1 from Ba3. The short-term local- and foreign-currency deposit ratings of not-prime remained unchanged.

The outlook was negative.

The downgrade concludes a review for possible downgrade that began in June when the bank announced its acquisition of Banco Schahin SA, renamed Banco de Credito e Varejo SA.

Moody's also said it upgraded to B1 from B3 the foreign-currency debt rating assigned to subordinated notes issued by Banco Schahin due November 2016, reflecting the assumption of these obligations by Banco BMG.

The downgrade reflects a view that the bank's specialized business model remains under pressure in light of ever-increasing competition in its core product, the agency said.

The downgrade also considers challenging funding conditions, which will continue to constrain the bank's earnings generation capacity and its ability to replenish capital, Moody's said.

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