S&P lowers view on Colombia banks to negative

By E. Janene Geiss

Philadelphia, Feb. 18 – Standard & Poor's said it revised the outlook to negative and affirmed the ratings on six financial companies in Colombia.

The outlook revisions follow S&P’s belief of increasing economic imbalances in Colombia as a result of the country’s weakening external position.

The following banks now have a negative outlook: Bancolombia, SA y Companias Subordinadas; Banco de Bogota SA y Subsidiarias; Banco Davivienda SA; Financiera de Desarrollo Nacional SA; Financiera de Desarrollo Territorial SA (Findeter); and Bancolombia Panama SA.

The following core entities also were downgraded to a negative view: Banistmo SA; BAC International Bank Inc.; and Credomatic International Corp.

S&P said it recently revised the Bicra score on Colombia to group 6 from 5, which anchors banks operating in the country at BB+.

This action reflects the revision of the country’s economic risk score to 7 from 6 due to the increasing economic imbalances and weakening external position of the country, the agency said.

Lower global commodity prices, particular for oil, have reduced Colombia's export revenues and widened the country's current account deficit, the agency explained.

S&P said it estimates it at 6.6% of GDP in 2015 and narrowing further in 2016 through 2018.

These factors reflect a moderate vulnerability for the economy, which pressure the domestic banking system, the agency said.

However, other risks making the country’s economy vulnerable include its low-income household levels and rapid credit expansion, S&P added.

© 2015 Prospect News.
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