Moody's downgrades Banco Fibra

Moody's Investors Service said it downgraded Banco Fibra SA's long-term foreign-currency subordinated debt rating to B2 from B1, bank financial strength rating to E+ from D- and baseline credit assessment to b1 from ba3. The outlook is stable.

The agency said the downgrade reflects the weakening profitability and resulting poor internal capital generation that derive from the ongoing strategic repositioning of the bank's franchise. While sizable credit costs have already been taken, Moody's anticipates that Fibra's process of re-fitting its operation will require additional administrative charges and loan loss provisions that will continue to weight on its performance over the next quarters, although problem loans may be close to peak levels.

The agency noted that Fibra's expertise in corporate lending, which will become its key business focus going forward, allows the bank to leverage the supplier chain of other companies owned by its shareholders, a business that will likely reflect in contained risk and assured margins.

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