S&P puts Multibank on negative watch

S&P said it placed Multibank Inc. y Subsidiarias on CreditWatch with negative implications after Banco de Bogota SA y Subsidiarias announced plans to acquire Multibank.

“The rating action follows Banco de Bogota’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 Bogota 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,” S&P said in a press release.

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